UBS Group Stock

Ladies and gentlemen, good morning. Welcome to the UBS Second Quarter 2026 Results. The conference must not be recorded for publication or broadcast. [Operator Instructions]

At this time, it's my pleasure to hand over to Sarah Mackey, UBS Investor Relations. Please go ahead, madam.

Good morning, and welcome, everyone. Before we start, I would like to draw your attention to our cautionary statement slide at the back of today's results presentation. Please also refer to the risk factors included in our annual report together with additional disclosures in our SEC filings. Throughout our remarks, we will refer to underlying results in U.S. dollars and make year-over-year comparisons unless stated otherwise. On Slide 2, you can see our agenda for today.

It's now my pleasure to hand over to Sergio Ermotti, Group CEO.

Thank you, Sarah, and good morning, everyone. Almost 3 years ago, we presented our first set of consolidated results. From the beginning, I made it clear that the acquisition of Credit Suisse was not a gift that we received, but rather a price that we would have all had to fight to win. As expected, the journey was not a straight line, it required a lot of hard work from my colleagues at UBS and painful decisions. Now these efforts are paying off and the extraordinary patience and support of our shareholders is starting to be rewarded.

In the first half of the year, we achieved a return on CET1 capital of around 17%. While the year is not over, we are close to achieving the same level of profitability UBS had prior to the acquisition, underscoring our efforts over the last 3 years. Just as importantly, we laid the foundation to drive sustainable value creation and long-term growth while providing enhanced capabilities to our clients and even better opportunities for our people.

The second quarter provided further evidence of the power of our globally diversified franchise and our potential. Markets remained remarkably resilient and client sentiment was constructive, supported by growing confidence in the long-term outlook for global growth and continued investment in AI and emerging technologies. Against this backdrop, our integrated One Bank model remains a key driver of growth as we deliver the full breadth of our capabilities across the firm to clients, deepening relationships and reinforcing our competitive position. This was reflected in another quarter of robust inflows into our Global Wealth and Asset Management platforms, which drove group invested assets to a record of $7.3 trillion.

The value of collaboration is most evident in the performance of our APAC and Americas regions this quarter, where we achieved several revenue records across our franchises. Profit before tax doubled in APAC and grew by 85% in the Americas. In Switzerland, we granted or renewed around CHF 40 billion of loans to businesses and households, and we saw broad-based growth across all our businesses booked in Switzerland and for the first full quarter in which we were operating on UBS platforms.

The Investment Bank delivered another quarter of exceptional returns while maintaining risk and capital discipline, a reflection of our strengthened competitive position and the enhanced scale of our platform. We are also close to substantially completing the integration by the end of the year as planned. With all clients migrated and the wind down of Non-core and Legacy nearing completion, more than 90% of legacy business applications are no longer in use. This enabled us to accelerate decommissioning and further simplify our operations.

As we realize cost synergies, we continue to strategically invest to drive long-term growth by expanding our technological capabilities, including AI, digital assets and infrastructure. We are empowering our colleagues with the tools and skills needed to accelerate adoption and deliver greater value for clients and help improve productivity in the coming years. Our performance to date has resulted in a healthy capital generation. This has further fortified our balance sheet for all seasons and allows us to continue to deploying resources towards profitable growth opportunities, to support clients and deliver on our capital return ambitions.

With our latest share repurchase program just finished, we are continuing with another program under which we intend to buy back $3 billion of shares at the latest by the end of the second quarter 2027. We plan to buy back at least $1 billion over the next 3 months. The amount and pace will remain subject to our short-term financial performance and outlook, maintaining a CET1 capital ratio of around 14% and further visibility on the deliberations by the Swiss Parliament on the capitalization of foreign subsidiaries.

As we enter the third quarter, market conditions remain broadly constructive, supported by healthy client engagement, the continued broadening of market leadership and historically elevated equity dispersion. At the same time, ongoing geopolitical developments and volatile energy prices lead to high levels of uncertainty around inflation and interest rate outlook. This could contribute to changes in macroeconomic conditions, periods of elevated volatility and more measured investor sentiment.

In closing, we entered the second half of the year with considerable momentum, and we are well positioned to outperform our 2026 exit rate return target and achieve our exit rate cost/income ratio target. But we know that conditions can change quickly and important work remains. As a result, we remain firmly focused on what we can control, staying close to clients, completing the integration, executing on our growth plans and managing risk with discipline, all while remaining a trusted partner in the communities where we live and work.

With that, let me hand over to Todd.

Thank you, Sergio, and good morning, everyone. In the second quarter, we delivered reported net profit of $2.8 billion and earnings per share of $0.87. On an underlying basis, our pretax profit was $3.9 billion, up 45% year-on-year, and our return on CET1 capital was 16.4%. Revenues increased by 16% to $13.3 billion and were up 14% across our core franchises. Operating expenses were 7% higher on stronger revenue performance and were down 7% when excluding variable compensation, litigation and currency effects. Overall, we drove 8 percentage points of positive operating leverage, resulting in a cost/income ratio of 70%.

Moving to Slide 6. Our strong second quarter results underscore our earnings power with broad-based growth across each of our core franchises, led by Global Wealth Management and the Investment Bank. This balanced performance reflects continued client momentum, the breadth of our capabilities and the durable benefits of the integration. On a reported basis, our pretax profit of $3.6 billion included $352 million of revenue adjustments and $645 million of integration expenses.

Consistent with our full year guidance, we expect integration-related expenses in the second half to be around $750 million, split roughly evenly between the third and fourth quarters as we complete the remaining work and close out the integration program by year-end. The effective tax rate was 22%, slightly below our full year guidance of 23%.

Turning to our cost update on Slide 7. During the second quarter, we delivered further gross cost reductions of $1.1 billion, bringing cumulative savings since the end of 2022 to $12.6 billion. With more than 90% of the cost synergies expected from the acquisition now realized, we remain firmly on track to achieve our $13.5 billion ambition by the end of this year. The total headcount at quarter end was 112,000, 4% lower sequentially and approximately 28% below our 2022 baseline. Over the same period, we've also reduced the group's operating expenses by 28% when excluding litigation, variable compensation and currency effects.

Building on strong execution in the first quarter, we further progressed our cost actions in 2Q, accelerating the realization of synergies we had expected later this year. Together with strong revenue performance, this has created additional capacity, which we are selectively directing towards investments in growth, technology and operational resilience to strengthen our positioning for the future. At the same time, we remain firmly focused on delivering our underlying cost/income ratio target as of the end of the year.

Turning to Slide 8. As of the end of June, our balance sheet for all seasons consisted of $1.7 trillion in total assets. Within that, we saw 1% sequential growth in our loan book, while deposit balances were broadly stable. Credit quality within our loan portfolio remains strong with credit impaired exposures of 1% and a 7 basis point cost of risk. Group credit loss expense totaled $121 million, largely driven by Stage 3 positions in Personal & Corporate Banking and the Investment Bank. Our tangible book value per share decreased sequentially by 2% to $26.89, primarily as shareholder distributions of $3.4 billion related to the 2025 dividend and share repurchases in the quarter more than offset total comprehensive income.

On funding, having completed our AT1 plan by the end of March, we took advantage of favorable market conditions in the second quarter to prefund part of our future AT1 needs. Looking ahead, we'll remain opportunistic as market conditions allow. Overall, we continue to operate with a highly fortified and resilient balance sheet with total loss absorbing capacity of $194 billion, a net stable funding ratio of 115% and an LCR of 177%.

Turning to capital on Slide 9. Our CET1 capital ratio at the end of June was 14.4%, and our CET1 leverage ratio was 4.4%. Our common equity Tier 1 capital in the quarter decreased by $0.8 billion, mainly as earnings accretion was more than offset by accruals for future capital returns, including the entirety of the new $3 billion share repurchase program that Sergio highlighted earlier. The buyback accrual reduced our CET1 capital ratio in the quarter by around 60 basis points with a 20 basis point impact on our CET1 leverage ratio. RWA increased by $4 billion, while LRD was lower sequentially by a similar amount, reflecting disciplined resource deployment alongside elevated client activity.

Turning to UBS AG. The parent bank's stand-alone CET1 capital ratio on a fully applied basis increased sequentially to 14.4%, mainly reflecting dividend payments from its subsidiaries and strong operating performance. This was partially offset by a $1.8 billion dividend accrual in the quarter.

Turning to our business divisions and starting on Slide 10 with Global Wealth Management. GWM delivered a pretax profit of $2 billion, up 38% year-over-year with positive operating jaws of 7 points and double-digit growth across all regions and revenue lines. Our performance this quarter once again demonstrates the strength and breadth of our wealth franchise. The combination of leading capabilities, differentiated CIO insight and a truly global footprint positions us to capture an increasing share of the secular growth in global wealth.

Net new assets totaled $36 billion, equivalent to 3% annualized growth and contributing to a seasonal sequential increase in invested assets of 6%. We continue to see strong demand for our CIO-led solutions, leading to $13 billion of net new fee-generating assets and record mandate penetration, clear evidence of the value clients place on our trusted expert advice. Demand for discretionary mandates remained particularly strong, including for our flagship My Way solution with invested assets now exceeding $40 billion, up 75% year-on-year. Client sentiment remained constructive during the quarter, supporting continued releveraging across regions.

Net new loans were $7 billion, mainly driven by Lombard, especially in the Americas and APAC. Net new deposits were $2 billion as inflows into current and savings accounts more than offset outflows in fixed term deposits. From a regional perspective, Asia Pacific delivered another quarter of standout performance with pretax profit up 48%, a 45% pretax margin and double-digit growth across all revenue lines. Asset gathering also remained strong with annualized growth of 5% in net new assets and 8% in net new fee-generating assets. Mandate penetration increased by 5 percentage points year-on-year to a record level, underscoring how the APAC wealth team is broadening client relationships and adding another dimension to its growth through more recurring and diversified revenue streams.

In the Americas, disciplined execution of our strategic priorities continues to drive stronger momentum and profitability. Pretax profits grew 47% with a pretax margin of 16%, supported by record quarterly revenues. Net new loans were $3 billion, reflecting continued traction from our enhanced banking capabilities. Strong same-store performance drove positive net new assets of $1 billion despite around $10 billion of seasonal tax-related outflows.

EMEA delivered another strong quarter with pretax profit increasing 28% and the pretax margin reaching 38%, alongside $12 billion of net new assets. Continued and sustained demand for CIO-led solutions drove 9% annualized growth in net new fee-generating assets, helping lift mandate penetration by 5 percentage points year-on-year and setting a new benchmark for the division. Our Swiss unit grew its pretax profit by 25% and attracted $14 billion in net new assets, reflecting growing client momentum and operating efficiency following the successful completion of the Swiss booking center migration last quarter.

Turning to divisional revenues, which increased by 14%. Recurring net fee income grew by 11% to $3.7 billion, supported by positive market performance and around $70 billion of net new fee-generating assets over the past 12 months. Transaction-based income rose 23% to $1.5 billion, marking the 12th consecutive quarter of double-digit year-on-year growth. APAC and the Americas each grew transaction fees by around 30%, fueled by strong client activity in structured products and cash equities. This reflects the power of our integrated client-centric approach, bringing together GWM and the IB to deliver differentiated solutions at scale.

Net interest income of $1.8 billion rose by 12% year-over-year and 1% sequentially, with the quarter-on-quarter rise largely driven by higher loan volumes. For 3Q, we expect GWM NII to increase modestly, supported by further lending expansion and higher deposit margins. We now expect full year 2026 GWM net interest income to grow by around 10% versus 2025 with strong loan growth, higher U.S. dollar rates than previously assumed and an improved deposit mix more than offsetting margin compression in lower rate currencies. Operating expenses in GWM rose by 6%. When excluding variable compensation, litigation and currency effects, costs declined by 1%.

Turning to Personal & Corporate Banking on Slide 11. P&C delivered a pretax profit of CHF 676 million, up 21%, with positive operating leverage of 7 percentage points. With the final stages of client account migration successfully completed, our Swiss business entered the second quarter fully focused on growth. Strong momentum in both attracting new clients and deepening existing relationships drove positive net new clients, balance sheet expansion across both loans and deposits and 10% annualized net new investment product growth for the first half. These higher volumes and client activity levels contributed to a 3% increase in total revenues. Net interest income increased by 1% year-on-year and 2% sequentially, driven by higher loan volumes.

We expect continuing lending momentum to support flat to slightly higher P&C NII in the third quarter. Noninterest revenue increased by 4%, led by Personal Banking, where custody and mandate fees benefited from positive markets and strong net new investment product flows. In Corporate & Institutional Clients, lower activity in structured and syndicated finance largely reflected deal timing slipping into later periods, while trade and export finance remained strong, particularly among clients in the energy sector. Other revenues this quarter included valuation gains on investments.

Credit loss expense was CHF 61 million, driven by Stage 3 positions. Given ongoing macroeconomic uncertainty, we continue to expect credit losses in the second half to average around CHF 75 million per quarter. Reflecting the first half outcome, we now expect P&C's full year CLE to come in below our previous estimate of around CHF 300 million. Operating expenses declined by 4%, driven by continued synergy realization and disciplined cost management.

Turning to Asset Management on Slide 12. Pretax profit grew by 9% to $237 million with assets under management surpassing $2.2 trillion. Revenues declined by 2%, mainly reflecting the absence of fee contributions from O'Connor following its sale at the end of last year. Excluding business exit effects, revenues increased by 5% as fees from higher average invested assets were partly offset by margin pressure and an adverse year-on-year swing in net valuation effects. Net new money was $6 billion, driven by SMAs, ETFs and Unified Global Alternatives. UGA reached $366 billion of invested assets and attracted $10 billion of new commitments across GWM and AM in the quarter.

Building on this momentum, we recently announced a strategic partnership with MSCI to enhance transparency and support growth by combining our investment expertise and client insights with MSCI's data and analytics capabilities. Operating expenses declined 6%, reflecting ongoing cost discipline and the lower direct expense base following the O'Connor disposal. We expect the sale to have broadly similar impacts on third and fourth quarter revenue and expense comparisons.

On to Slide 13. The Investment Bank delivered excellent results, generating record 2Q revenues, a pretax profit of $1.2 billion, more than double the prior year quarter and a pretax return on equity of over 23%. Notably, we achieved this performance without materially expanding our balance sheet. While revenues increased 31% to $3.7 billion, RWA and LRD rose only modestly, underscoring the strength of our client franchise and our ability to capture significantly higher activity with disciplined use of financial resources.

Global Banking revenues increased by 33% to $693 million. Capital Markets was a standout, up 55% with notable strength in LCM, where revenues more than doubled year-on-year alongside strong performances in both ECM and DCM. Advisory revenues were 5% lower, primarily reflecting an M&A market increasingly skewed toward a small number of very large transactions where participation is often influenced by broader client financing relationships. Looking ahead, our pipeline remains healthy with strong client engagement and activity building across regions, supported by close collaboration with GWM in originating advisory opportunities. Beyond the very largest deals, we continue to see good momentum across the broader advisory market, particularly in the mid- to large cap segment, where our competitive position continues to strengthen.

Global Markets delivered a record second quarter with revenues increasing by 31% to just over $3 billion. Equities led the performance with revenues up 53% on strong client activity, elevated cash equity volumes and exceptional momentum in Asia Pacific, where markets achieved a record quarter. FRC revenues were 21% lower, reflecting a less favorable environment for our business mix than a year ago and disciplined resource allocation as we selectively shifted balance sheet capacity to capitalize on stronger client momentum in equities. Operating expenses increased by 11%, driven by higher personnel expenses.

On Slide 14, Non-core and Legacy generated a pretax loss of $52 million, while we continue to drive down costs on an accelerated basis. Excluding litigation, expenses in the quarter declined 72% year-on-year and 30% sequentially, resulting in cost reduction versus the 2022 baseline of 88%. Reflecting the pace and scale of cost savings already achieved, we now expect the 2026 exit rate for NCL operating expenses, excluding litigation, to be around $400 million. Risk-weighted assets in NCL were broadly stable sequentially, reflecting a concentration of smaller, more bespoke positions in the residual portfolio.

To close, the return on CET1 capital and the cost/income ratio we delivered in the first half of 2026 are important proof points of the earnings power and scalability of our franchise as well as our continued cost discipline. They also demonstrate how strong client engagement, disciplined execution and capital efficiency are translating into durable operating leverage as we enter the final phases of the integration and position the firm for future growth. With both metrics already ahead or within striking distance of our 2026 exit rate targets, we are increasingly confident in our ability to meet and potentially exceed our financial ambitions.

With that, let's open for questions.

[Operator Instructions] The first question comes from the line of Jeremy Sigee from BNP Paribas.

I wanted to ask a couple of questions about the businesses, please, actually. Firstly, on the Investment Bank, I was going to ask how you balance the growth opportunity versus the balance sheet constraints that you impose on that business. But you're sort of showing us here that actually you can get the revenue growth without expanding the balance sheet. And I just wondered if you could talk about how you achieve that? How do you put through significantly more volume with a constrained or an unchanged balance sheet in the IB? So that's my first question. And then the second one was just on U.S. Wealth Management. I know it's a familiar theme, but you saw significant further adviser exits in the quarter. I just wondered if you could comment on those exits and more broadly where you are in the stabilization of the U.S. Wealth Management franchise.

Jeremy, thanks for those questions. So in terms of the IB, I mean that is an excellent point you bring up and something, of course, we're very focused on. We operate within our limits. We think that's important to the value proposition that we offer, which is to run an Investment Bank that supports Global Wealth Management and also our Corporate & Institutional Clients. And so for us, resource allocation to the IB and within the IB is really for us, stock in trade and how we're very focused.

You asked about how. I mean, the focus for the business was really on intermediation within equities is where we drove a lot of the outperformance that we had in equities. And so that was certainly a focus. The balance sheet, of course, within equities was used more sparingly to support prime brokerage financing balances. And as I also highlighted in my prepared remarks, we also allocate within the IB as we see fit and saw more opportunities in the quarter to drive some of the markets outperformance, including in intermediation and move some of the capital allocation away from FRC into equities.

On your second question, look, we're comfortable with the steps we're taking to drive full year net new assets in wealth in the Americas. We also recognize there's a lag effect from previously announced FA movement that will continue to show up in flows for a few quarters. This said, we're actively recruiting and investing in teams aligned with our profitability ambitions. And it's important to note that rotation among financial advisers remains elevated across the industry given record valuations. But we continue to expect these dynamics to normalize in our book over the course of 2026.

The next question comes from the line of Giulia Aurora Miotto from Morgan Stanley.

My first one is on the buyback, the $3 billion. How should we read the fact that this goes until June '27 rather than until year-end? So I would guess if we get some sort of compromise in parliament, maybe it can be completed by year-end, if not, by June. So any comment on how should we think about the buyback would be great. And then secondly, on the parent capital, the plus 50 bps quarter-on-quarter. Any comment on that capital build, please?

Giulia, thanks for the questions. So look, the way the share buyback language was constructed was to do a couple of things. One, we wanted to talk about a commitment of at least $1 billion that we're going to do over the next 3 months. On the other hand, the program that we just announced today runs for 2 years. We gave an outlook that we would expect to be done latest by 2Q '27. That's going to depend and be determined by -- in terms of the timing/pace, but also the amount by the things that we've always said, our performance supported by markets, our capital ratio of around 14%, but also the deliberations that are ongoing in the parliament around the Swiss capital issue. So we sized that timing. And ultimately, as these developments offer more visibility, then we can update on any changes in our expectations. But that's the way we signposted the time line on this new program.

In terms of the parent bank and the sequential build in capital, I think it's owing to a couple of things. The first, of course, is the strong operating performance of the group, which manifests as well in the parent bank, among others. Also the strong operating performance in its subsidiaries, allowing for stronger levels of upstreaming to the parent bank, just even ordinary dividends that we saw, for example, by the Americas in the second quarter and also by the Swiss subsidiary. So holding revenues were also strong on top of the operating revenues.

The other point, though, that counterbalances that is that we're pacing the level of dividend accrual that we're upstreaming to the group. So if you look at our first half performance in the parent bank, we've generated around $5 billion of profit, and we've accrued about $3.5 billion of dividends. So at this point, that's reflective of our managing the parent banks on a consolidated basis, Tier 1 leverage ratio prudently. So the combination of stronger performance in sum and the way we're thinking about upstreaming to manage the Tier 1 leverage ratio at the parent bank on a consolidated basis contributes to the sequential growth in the parent bank stand-alone capital ratio.

The next question comes from the line of Kian Abouhossein from JPMorgan.

First question is -- and both are related to Asia Wealth. First question is related to ODI rules in China, which kicked in July 1. Just trying to understand if it had an impact on your business and how you think about ODI impact generally on your Wealth business in Hong Kong, in particular? And then second question is related to Hong Kong again, where we see material growth in the affluent and also in the high net worth segment where you are maybe not present, especially clearly not in the affluent. Just trying to understand if you have any ambitions to expand in that area, considering the structural growth we're seeing in affluent, high net worth Hong Kong.

Thanks a lot, Kian, for those questions. So first on ODI, it's still early. But based on what we're seeing today and the conversations we had, we don't view the evolving framework as a material constraint on the opportunity that we have, nor is it having any certainly immediate impact on flows. We see those developments primarily as more of an evolution in transparency and reporting requirements, in particular, a consolidation of existing requirements with more focus on enforcement and specifically on offshore online brokers targeting Mainland investors.

So we don't see that as a real catalyst for change and affecting client demand for international diversification, and it's certainly not hitting through in our numbers. And I would just add that given our cross-border framework and our strong compliance mindset and disciplined source of wealth standards, we also believe that we're very well positioned to navigate that evolving environment.

In terms of the -- you asked about Asia flows and affluent ambition. Let me -- I'd make a couple of points. So first, we're very pleased with the position of our Asia franchise. In addition to first half NNA and an FGA annualized growth of 7% and 10%, respectively, we're continuing to deliver very strong profitability and profitability growth. And we're also growing clients and client assets as well as broadening the regional contributions to client asset and profitability growth.

And also, as I mentioned in my prepared comments, we're broadening client relationships, and we're adding another dimension to our growth through more recurring diversified revenue streams. This quarter, as I mentioned, setting a record for mandate penetration in that part of the division. And second, Kian, we're not standing still. We're investing selectively in areas such as high net worth adviser capacity, particularly through digital and platform scalability to broaden our growth opportunities. So we believe that the team is doing the right things to continue to grow fast. And we don't see it as a trade-off between growth and profitability. We believe we can capture both.

In terms of the wealth spectrum, that is also quite a focus for the team to continue to invest, as I mentioned, in high net worth and to drive that. At the moment, the mass affluent is less a focus, but we believe as we build out our digital capabilities that this is something that we can see moving into the various aspects of the wealth spectrum, including potentially the upper part of affluent.

That's interesting. May I just ask you one more as we talked about mandate penetration, you mentioned that. Where are we on mandate penetration in GWM? We haven't had an update for a while.

Well, overall, so we've -- we're now at sort of an all-time high across all of the sectors. APAC has come a very long way. If you look at the time series in terms of mandate penetration and has doubled it over the last 2 or 3 years in terms of that. So it really is broadening out, not only the types of solutions it's bringing to clients, transaction-based, but also mandates, but as well across the region. So there's more geographic diversity within APAC as well. So we're broadening that out. We're broadening out the revenue drivers. And so all that speaks to quite a bullish view on its growth prospects.

The next question comes from the line of Stefan Stalmann from Autonomous Research.

I wanted to start with your very strong performance in equities trading. It's not quite as good as the U.S. banks, but it's better than your European peers that have reported so far, and you've probably done quite a bit of benchmarking work around this. Maybe you can add a bit of color of where you think you've done better or worse than others, maybe where business mix or geographic differences play a role in explaining the relative performance versus peers. And the second question is about GWM, where you mentioned a $8 billion negative impact on invested assets from exiting certain markets or exiting certain services. Could you maybe explain what that relates to?

Stefan, so the latter one was just an exit in one part of our business, a small part, relatively small part, and so it impacted on AUM, but because of the exit didn't impact on flows in the quarter. In terms of equity trading and more color there, I'd say our geographical diversification really across the IB is a differentiator for us. And so we're strong really across the globe and with strong focus this past quarter, of course, at the -- being able to leverage the APAC opportunity, and that was quite evident in our results. But I think it is the geographic diversity that is a differentiator, I would say. And our ability, as I also mentioned, to stay close to clients, the relationships that we have developed and our ability to generate revenue growth without extending the balance sheet materially really has been a differentiator for equities trading. And as far as...

And maybe just...

No, go ahead.

I just wanted to follow up on the first point, please, the $8 billion. Was that an exit from a particular geography? Or was it more of a client group? And which geography would I find that in?

We'll come back on the details on that one, Stefan.

The next question comes from the line of Anke Reingen from RBC.

The first is on your return on core Tier 1 capital. It seems that you're looking to exceed your target for 2026. And while I understand you might not necessarily want to update 2028 at this stage, I'm just wondering based on like structural progress you made in 2026, where you see -- are you seeing potential upside to your 2028 target? Or is this just trying to distinguish between cyclical versus structural progress on your ROE? And then secondly, on Asia, I understand you don't want to probably comment on intra-quarter momentum. But given some of the weakness in equity markets in the region, are you seeing this as a more material headwind to your equities performance as well in Investment Bank as well as in Wealth Management?

Thanks, Anke. So on the returns, look, we're obviously quite pleased with our performance and the momentum we're seeing across the business. We continue to have confidence in our ability to deliver against our ambitions with the first half performance that we've delivered. As we've mentioned, we're well positioned to achieve our targets with scope to outperform. Beyond that, specifically in terms of anything regarding 2028, we'll update you as part of our fourth quarter strategic update early next year.

On your question around Asia, look, I mean, the performance, I'm not sure I fully took the question, but the performance I commented in response to Kian's question about the positioning of the Asia Wealth business. I think as well, the IB in Asia performed quite strong. And as Sergio mentioned in his comments, Asia was a standout regional performance. So we see very strong continuing momentum in APAC, and we're quite encouraged about the momentum we're seeing in the outlook.

I would just add one -- maybe one other point to the prior question from Stefan, just one other differentiator across the equities is prime brokerage for us and the financing revenues that we've generated having -- even though we've been very disciplined from a resource allocation perspective, I think the prime brokerage has been one area that is also differentiating us from certain of our peers.

The next question comes from the line of Andrew Coombs from Citi.

Perhaps one follow-up and then a fresh question on net new money. On the equities result, you talked about having a diversified geographical mix, but you do over-index in Asia versus a number of your peers. And clearly, that's had a very strong second quarter because of the index rebalance given what's happened in Korea and to a lesser extent, Taiwan, too. We're now seeing that reverse. So I assume that will probably be beneficial for Q3 as well. But beyond that, how sustainable do you think the equities revenue strength is in Asia?

And then more broadly on net new money, very healthy print in Europe and Asia, U.S., too. Can you just elaborate on how much of that you think is cyclical related to the current IPO environment that we're seeing versus how much of that is actually structural because you've now integrated Credit Suisse, a lot of the attrition of RMs is easing. And in any case, you're actually starting to grow again in some regions.

Yes. Thanks, Andy. On the equity strength in Asia and the outlook, look, I think that is the benefit of diversification that we have is that we're well positioned to take advantage, for example, of strong equity markets and client activity levels in Asia as we saw in the second quarter. But of course, the depth of our business across Europe as well as in the Americas allows us to really take advantage of wherever there are strong markets. So sure, the very strong performance in volumes that we saw in Asia in the second quarter and the first quarter for that matter is unlikely to continue at that level, but we're well positioned to take advantage just given our global diversification.

In terms of the wealth management question around whether it's cyclical or structural, I would say that, of course, while supportive markets have contributed, an increasing share of the performance that we have reflects non-market factors. And this is giving me confidence around the durability and structural strength of our profitable growth trajectory through the cycle in GWM. And the proof points, and I've mentioned this a couple of times, are our record mandate penetration, but also sustained transaction-based revenue outperformance, lending momentum and also deeper client engagement through the integrated delivery of more and more One UBS capabilities. So on that, the structural versus cyclical question, I do think we're seeing, and that is our strategy is to push more and more into structural so that the performance that we see is more durable.

The next question comes from the line of Benjamin Goy from Deutsche Bank.

Two questions, please, from my side. First, on a different topic, Personal & Corporate Banking. The cost base stable, but clearly down year-on-year. Just wondering now the progress you have done on the integration, whether we should expect a more meaningful step down now in cost base in Q3 going forward? And then another question on Asia. Just wondering about your One Bank strategy, whether you can comment on the visibility of the pipeline of inflows, also thinking about lockups coming after the IPOs in recent months and how that could support your Wealth Management franchise, too.

Ben, on the second one first, in terms of the lockup issue around IPOs, I think what's important to underscore here is that our GWM performance in terms of growth and asset acquisition is not geared toward any one thing, it's quite diversified across the board. And so where there has been, say, a spate of IPOs, of course, that's helpful. We think IPOs are foundational to the outlook in Wealth Management. But that said, for us, it's not something we're highly dependent on to drive growth. And as a result, of course, if there are lockups post IPO, we're not pricing in any downturn in net new asset growth as a result of that.

On the cost side, so we continue to see meaningful integration-related benefits coming through Wealth and P&C in the second half, including from technology decommissioning, organization simplification and other integration actions. We mentioned the strong execution we had in the first half, including in the second quarter, and that has meant that some of these benefits were realized earlier than we had previously expected. And as I mentioned in my prepared remarks, at the same time, we're selectively investing a portion of the capacity that we created into technology and other initiatives, including select adviser hiring that support growth, productivity and attractive long-term returns.

So for us, the clear guardrail remains our exit 2026 underlying cost/income ratio target, and we remain firmly focused on delivering it. But as we finish out the integration, we should still expect to see further benefits on our OpEx line.

The next question comes from the line of Amit Goel from Mediobanca.

I've got some follow-up questions just on the U.S. Wealth business. So one was just on your commentary about the flows and I guess, what we can expect going forward. I suppose previously, you said you expect the net recruiting outflow impacts to materially taper in the second half of this year. Is that still the case? I mean, just based on some of the data, it seems like in Q2, there were still a lot of adviser outflows, so there could still be an impact into Q3. And then just when I'm looking at the mix in terms of -- in the quarter, so the net new assets were positive, but then the net new fee-generating assets were negative. When I look at Q2 in prior years, the net new fee-generating assets have held up better. I'm just wondering what's driving that dynamic? Was there anything in particular this quarter to influence that?

Amit, so first on the Wealth headcount in the U.S. So just to orient, so we -- if you look at the table, we're 2% down year-on-year and 1% down quarter-on-quarter, just to sort of orient the point. The other point that's important to mention is that the reported headcount, as I've said several times in the past, the reported headcount numbers reflect the lag in timing because that's actually when the advisers either come on when recruited or come off when they move our payroll. So there is a lag in that.

But I think what's important, the broader point I would make is that we expect as we work through the issue, which we continue to do, that this will have a tapering impact, which is why we have been -- we've been forecasting and guiding on positive net new assets for the year, contributing from Wealth in the Americas. And so we expect the trend to continue and would expect an improving second half as well, but we are continuing to maintain that Wealth in the Americas will be a positive contributor to net new assets for the full year 2026.

In terms of net new assets versus NNFGA, nothing I would call out. I think the -- we've had very strong net new fee-generating asset growth. When you look back over the last 12 months, I'd say I wouldn't read -- overread into one quarter versus the other in terms of whether there's -- we're indexed more into net new fee-generating assets versus net new assets. So nothing I would take away or no one particular driver that I would call out in explaining the delta between the two metrics. But just over time, they're both meeting our expectations, and that's really the more important point.

The last question comes from the line of Joseph Dickerson from Jefferies.

Congratulations on a very robust set of results. The question I had is you've guided the GWM NII to grow by around 10% versus '25. It's interesting because this number is quite some ways ahead of where the market expectations are. Could you just kind of break that down a little bit in terms of what is rates versus volume? Or is this just, frankly, because you've seen a better result in lending volumes and deposit margins are remaining robust? Or is it -- I guess what I'm getting at is what element, if any differential in interest rates? Or is it really on volumes?

And then secondly, I guess, strategically on Asset Management. Is this a business that you are -- if you look at the business, it's not a large part of the group. I guess, how fungible is it with the group? It's been, I think, slightly underwhelming the past few quarters. Is this a business that you intend to keep strategically? I know there was speculation over the years about it, but any comment on that business and the strategic rationale with the rest of the group would be great.

Joe, let me address the first question. So on GWM, I did mention that the guidance that I offered around 10% up year-on-year was in part supported by higher rates, but also lending growth and also a favorable deposit mix. So really breaking that down, I would say that moderately higher dollar rates as we're now looking or now that our outlook would suggest moderately higher U.S. dollar rates, that creates structural tailwind for the business. And that comes from asset yields from loans and also our replicating portfolio as those yields grind higher and are only partially offset by higher deposit costs that are tempered by our deposit mix remaining healthy. So that's the way I think about it and drives the revised year-on-year look.

So on Asset Management, I would say that, first of all, I think from a strategic standpoint of view, it fits very well, the thematic of us being an asset gathering center organization. But also if I look at what we do within Asset Management, first of all, I would like to highlight that the good momentum in reshaping and restructuring the business, basically disposing activities that were quite dilutive to our cost/income ratio and really getting it focused with a good progress towards achieving a strong relative performance also vis-a-vis our peers.

When I look at within that, I see a lot of potential for us to continue to grow. First of all, when you look at our alternative space, we are a top LP in alternatives. You saw the good inflows during the quarter and the good momentum we are having. We are also developing strong focus capabilities on passive ETFs. And so from a geographic standpoint of view, we are expanding our capabilities, also our joint ventures with external partners. So I'm very happy to see the good momentum, which I believe justify us continue to invest in this business and position it as a strategic element of our asset gathering center story. So I think it's an integral part of our equity story.

We have no further questions. So we'd like to close the call and thank everyone for dialing in and asking their questions today, and we look forward to updating you with our third quarter results and wishing everyone a good summer holiday. Thank you.

Ladies and gentlemen, the webcast and Q&A session for analysts and investors is over. You may now disconnect your lines. We will now take a short break and continue with the media Q&A session at 10:45 a.m. CEST. Thank you.

Ladies and gentlemen, good morning. Welcome to the UBS First Quarter 2026 Results Presentation. The conference must not be recorded for publication or broadcast. [Operator Instructions]

At this time, it is my pleasure to hand over to Sarah Mackey, UBS Investor Relations. Please go ahead, madam.

Good morning, and welcome, everyone. Before we start, I'd like to draw your attention to our cautionary statement slide at the back of today's results presentation. Please also refer to the risk factors included in our annual report together with additional disclosures in our SEC filings.

Throughout our remarks, we will refer to underlying results in U.S. dollars and make year-over-year comparisons unless stated otherwise. On Slide 2, you can see our agenda for today. It's now my pleasure to hand over to Sergio Ermotti, who today reaches a notable milestone with his 50th earnings call as Group CEO.

Thank you, Sarah, and good morning, everyone. In an increasingly complex environment, we delivered excellent first quarter results with a 17% return on CET1 capital and a 70% cost/income ratio, keeping us on track to achieve our 2026 financial objectives.

Our performance this quarter reflects our leadership position in the world's largest and fastest-growing markets with broad-based strength across all of our core businesses and regions. The quarter began against a backdrop of steady global growth and easing inflation. However, conditions quickly shifted with markets becoming more volatile amidst rising uncertainty, driven by concerns over AI-driven disruption and the conflict in the Middle East.

As the environment became more fragile, our engagement with clients intensified as they turned to UBS to protect their assets and identify opportunities. Asia Pacific was a standout performer as our unrivaled client franchises and one bank approach in the region generated around 1/3 of the group's profit before tax and drove robust net new asset growth in Global Wealth Management.

The Investment Bank also delivered exceptional performance, supported by increased collaboration with Wealth Management and a favorable environment for our business mix and leading franchises in FX, including precious metals, cash equities, financing and equity capital markets. And we achieved this without changing our approach towards disciplined resource allocation.

More broadly, we saw strong inflows across our asset gathering platform while facilitating elevated private, corporate and institutional client activity and sustaining lending momentum. In Switzerland, we granted or renewed around CHF 40 billion of loans to businesses and households as clients continue to rely on our local and global expertise.

Despite the ongoing uncertainties around private credit, we continue to see strong demand for alternatives led by our private market and hedge funds offering, Unified Global Alternatives saw record quarterly new client commitments. As we move through the second quarter, markets have remained broadly resilient, reflecting expectations that a durable diplomatic solution to the Middle East conflict is achievable.

That said, while clients remain engaged and active, risks are still elevated and conditions could shift rapidly impacting sentiment and activity levels. In this environment, our focus remains on supporting clients through disciplined execution as well as a prudent and selective investment approach, focused on diversification and principal protection.

Turning to the integration. In March, we successfully delivered one of the most critical and complex undertakings in our integration journey, the migration of Swiss-booked clients. As a result, I'm happy to say that the migration of former Credit Suisse clients onto UBS platforms is now complete. Client activation and feedback is positive and retention rates have far exceeded our expectations.

For this, I'd like to thank our clients for their continued trust and patience and my colleagues for maintaining the highest standards of service and client focus. We now turn our efforts towards substantially completing the integration by year-end and restoring the levels of profitability we had prior to the acquisition. This is necessary to make our business even more resilient and ready for the future.

Part of this will include continuing with the most painful part of the integration, reducing our workforce in line with our previously communicated plans. Finalizing the integration, including the decommissioning of the legacy infrastructure allow us to intensify our focus on growing our businesses.

We continue to invest across the group to deliver the breadth and depth of UBS to clients through a full one bank approach front to back. This will support enhancements to the client experience and prepare us to drive further efficiencies.

The latest example is the conversion of UBS Bank USA to a national bank charter. We are also encouraged to see that our AI capabilities are being recognized. We were recently named the best wealth management firm for use of AI in the U.S. at the Financial Times Wealth Tech Awards.

At the heart of this award is our flagship AI platform, which delivers timely and personalized client insights for our financial advisers. Nearly 90% of FA teams use the platform powering millions of AI-driven client interactions. In this environment, the benefits of our balance sheet for all seasons were evident once again with strong profitability and disciplined resource usage further bolstering our capital position.

This, alongside our integration progress, allow us to continue executing on our capital return objectives for dividend and buybacks while maintaining our investments for the future. We now expect to complete our current $3 billion share repurchase program by the time we report Q2 results in July.

Then we expect to provide more detail on our capital returns for the second half of the year. Our intentions will be calibrated based on our financial performance and outlook, maintaining a CET1 capital ratio of around 14% at year-end and further visibility on the parliamentary deliberation on the capitalization of foreign subsidiaries.

Before I hand over to Todd, I want to address last week's announcement on bank capital regulation and what happens next.

We have been very clear and transparent about our views on the proposed measures since they were first presented last June. We continue to strongly disagree with the proposed package because it is not proportionate or aligned with international standards. And as importantly, does not reflect the root causes and the key lessons learned from the Credit Suisse crisis. While there are some points that would deserve further clarification, let me just focus on what is still, by far, the most important one.

Regardless of how the figures are presented or which assumptions are applied, there is a broad agreement, including among the authorities that the announced measures would require UBS to hold around $22 billion in additional capital in CET1 terms. And this is on top of the $15 billion that we already need to hold as a result of the Credit Suisse acquisition under existing regulations.

If the package were to be finalized as currently drafted, that $22 billion of capital would be trapped and unproductive. And at such scale, it would impact our competitive position in supporting clients, investing for growth and delivering sustainable returns that keep UBS as an attractive investment case for shareholders.

This is particularly relevant for any bank where shareholders are the first line of defense in turbulent times by providing, if needed, additional capital. As the proposed treatment of foreign participation now moves to Parliament, we hope that a thorough deliberation will fully consider the rather clear concerns raised in the democratic process by a wide range of stakeholders.

We will continue to engage constructively and contribute to fact-based deliberations. Let me be very clear, these developments do not and will not change who we are as a firm. We remain committed to our diversified business model and our global and regional footprint.

We are also fully committed to protecting our shareholders while mitigating the impact of this increased requirements, if possible, on our clients and employees and the communities where we live and work. I'm proud of all what we have achieved this quarter, and I remain extremely thankful to all of my colleagues for their dedication in this demanding environment.

With that, let me hand over to Todd.

Thank you, Sergio, and good morning, everyone. In the first quarter, we delivered reported net profit of $3 billion and earnings per share of $0.94. On an underlying basis, our pretax profit was $4 billion, up 54% year-on-year and our return on CET1 capital was 17%. Revenues increased to $13.6 billion, and were up 18% across our core franchises.

Operating expenses were higher on stronger revenue performance and were down 7% when excluding variable compensation, litigation and currency effects. Our cost/income ratio was 70.2% with strong year-on-year improvement resulting from 11 percentage points of positive operating leverage.

Moving to Slide 6. Our profit growth this quarter reflects broad-based momentum across the franchise, the breadth of our geographically diversified platform and the value of disciplined execution. On a reported basis, our pretax profit of $3.8 billion included $600 million of revenue adjustments and $750 million of integration expenses.

We expect integration costs in 2Q to be around $700 million and to meaningfully taper throughout the rest of the year. The effective tax rate in the quarter was 20.5%. The lower rate was driven by the gain from the sale of our interest in Swisscard completed in 1Q, which resulted in a limited tax charge. We continue to expect our 2026 tax rate to be around 23% with some quarterly volatility consistent with prior years.

Turning to our cost update on Slide 7. During the first quarter, we delivered an additional $800 million of gross cost reductions, bringing cumulative savings since the end of 2022 to $11.5 billion. This represents 85% of our total gross cost save ambition and keeps us firmly on track to achieve our $13.5 billion target by the end of 2026. The total headcount at the end of March was 117,000, 2% lower sequentially and approximately 25% below our 2022 baseline.

Over the same period, we've reduced the group's operating expenses by 27% when excluding litigation, variable compensation and currency effects. Since we've started, we've incurred cost to achieve of around $13.7 billion at constant FX and remain on track to deliver on our gross cost save ambition at an efficient 1.1x multiple.

Turning to Slide 8. As of the end of March, our balance sheet for all seasons consisted of $1.7 trillion in total assets. Within that, we saw a 1% sequential increase in our loan book, 85% of which consisted of mortgages with an average LTV of around 50% and fully collateralized Lombard loans.

Private credit exposures at quarter end comprised a very modest portion of our total balance sheet, and were predominantly senior secured positions with prudent LTVs, supported by diversified collateral pools and conservative borrowing base structures.

Credit impaired exposures in our lending book stood at 90 basis points and the cost of risk declined sequentially. Group credit loss expense totaled $70 million largely as a result of a build in allowances on performing loans in light of the uncertain macro backdrop. Stage 3 in the quarter reflected a small net release after we recorded a repayment across both the Investment Bank and Non-core and Legacy.

Our tangible book value per share grew sequentially by 2% to $27.50 primarily from our net profit, which was partly offset by share repurchases. Overall, we continue to operate with a highly fortified and resilient balance sheet with total loss absorbing capacity of $198 billion, a net stable funding ratio of 117% and an LCR of 178%.

We also made strong progress on funding during the quarter, completing our 2026 AT1 issuance plan by mid-February. As a result, our additional Tier 1 capital increased to 4.7% of RWA, aligned with our goal to optimize our AT1 levels within the broader Tier 1 capital stack.

Turning to capital on Slide 9. Our CET1 capital ratio at the end of March was 14.7%, and our CET1 leverage ratio was 4.4%, both up sequentially. Our Common Equity Tier 1 capital in the quarter increased by $2 billion, principally due to earnings accretion that was partly offset by dividend accruals of $0.9 billion and currency translation effects of $0.2 billion.

RWA and LRD both increased sequentially by low single-digit percentages, demonstrating disciplined balance sheet deployment despite elevated client activity.

Turning to UBS AG. As of the end of March, the parent bank's stand-alone CET1 capital ratio on a fully applied basis, stood at 13.9%, broadly reflecting its first quarter operating results and a $1.8 billion accrual for the dividend intended to be upstream to group in 2027.

Turning to our business divisions and starting on Slide 10 with Global Wealth Management. GWM delivered a pretax profit of almost $2 billion, up 28% year-over-year with double-digit growth across all regions. This performance once again highlights the breadth and diversification of the franchise, underpinned by a well-balanced regional mix. Supported by the seventh consecutive quarter of positive operating jaws of at least 4 points, GWM achieved a cost/income ratio of 72%.

Net new assets totaled $37 billion representing a 3% annualized growth rate. In a more uncertain environment, clients increasingly turn to our advisers for guidance and CIO-led solutions. This drove 7% growth in net new fee-generating assets, which came in at $38 billion.

Strong demand for our discretionary mandates, including SMA and My Way, our flagship modular offering, resulted in record mandate penetration, underscoring the value clients place on trusted expert advice.

Turning to Wealth's balance sheet flows. The releveraging trends seen in recent quarters continued in the first quarter with net new loans of $5 billion, while net new deposits of negative $2 billion largely reflect outflows from fixed-term deposits, partially offset by inflows into current and savings accounts.

From a regional perspective, Asia Pacific delivered another quarter of standout performance, generating a pretax profit of $600 million, up 40% year-on-year. The region recorded double-digit growth across all revenue lines and achieved a pretax margin of 49%. Together with net new asset inflows of $19 billion, representing a 9% growth rate, these results underscore the competitive advantages of our Asian franchise.

Looking ahead, we'll continue to invest in our talent and capabilities across key growth markets such as Australia, Taiwan and Japan, while leveraging our strongholds in Greater China, Singapore and Southeast Asia. In the Americas, broad-based revenue momentum drove profit growth of 26% and a pre-tax margin of 13.7%, reflecting our continued focus on structural improvements in profitability and stronger outcomes for clients, advisers and the wealth franchise overall.

Net new loans were $2 billion, the eighth consecutive quarter of lending growth, demonstrating continued progress in enhancing our banking capabilities in the region. Supported by strong same-store performance, net new assets were positive at $5 billion.

For the second quarter, we expect NNA to be impacted by seasonal U.S. tax-related outflows in the low double-digit billions. For the full year, we continue to expect net new assets in the Americas to be positive, supported by both same-store growth and a healthy recruiting pipeline.

EMEA also performed very well with profit growth of 44% and an 8 percentage point improvement in the cost/income ratio to 62%. Switzerland increased its pretax profit by 20%. Looking ahead, we expect our EMEA and Swiss franchises to see continued profitability growth underpinned by sustained client momentum and supported by cost efficiencies as the Credit Suisse wealth platform in Switzerland is decommissioned over the coming months.

Turning to divisional revenues, which increased in the quarter by 12%. Recurring net fee income grew by 10% to $3.6 billion, supported by positive market performance and more than $60 billion of net new fee generating assets over the 12 months.

Transaction-based income rose 17% to $1.7 billion with APAC, EMEA and the Americas delivering double-digit growth, reflecting strong momentum in structured products and precious metals. This underscores our continued outperformance in transaction revenues, driven by strong client engagement and differentiated investment bank collaboration as clients actively rebalance portfolios.

Net interest income of $1.7 billion rose by 12% year-over-year and 2% sequentially, with the quarter-on-quarter trend reflecting favorable deposit mix shifts. Looking ahead to 2Q, we expect GWM net interest income to remain broadly flat as higher loan volumes are offset by lower deposit reinvestment yields. Operating expenses in GWM rose by 6%. When excluding variable compensation, litigation and currency effects, costs declined by 2%.

Turning to Personal and Corporate Banking on Slide 11. P&C delivered a first quarter pretax profit of CHF 710 million, up 19%, with revenue growth and disciplined cost management, combining to generate positive operating leverage of 10 percentage points.

Having largely completed the client account migration in P&C as we entered the year, freed up capacity is now supporting even deeper client engagement. This resulted in net new deposits of $3.5 billion, net new loans of $2.4 billion and net new investment product growth of 11%. Total revenues were 3% higher with 10% growth in non-net interest income, more than offsetting NII headwinds. Across Personal Banking and Corporate and Institutional Clients, Non-NII growth was broad-based with similar contributions from both franchises.

In our retail business, positive momentum in net new investment flows together with supportive market trends continue to drive custody and mandate fee growth. While in C&IC, revenue expansion largely reflected strong activity in structured and syndicated finance. The quarter also included a credit of CHF 27 million related to the completed Swisscard transaction. Net interest income declined by 3% year-on-year, reflecting the ongoing impact of the 0 rate environment in place since last June.

As highlighted previously, changes in Swiss franc interest rates in either direction would benefit P&C's revenues. On a sequential basis, NII was stable with this trend expected to continue in the second quarter. Credit loss expense totaled CHF 55 million. While the quarter reflected the lowest net Stage 3 charges since the Credit Suisse acquisition, we continue to expect CLE to average around CHF 75 million per quarter given ongoing macroeconomic uncertainty.

Operating expenses declined by 7%, demonstrating continued effective cost management. We expect further efficiencies as the legacy Credit Suisse platform is progressively decommissioned over the course of 2026.

Turning to Asset Management on Slide 12. Pretax profit increased by 21% to $252 million, driven by revenue growth alongside ongoing tight cost management. Total revenues rose 4%. Net management fees were up 6%, driven primarily by higher average invested assets despite secular margin pressure. Performance fees declined year-on-year, primarily due to lower contributions from SIG and the absence of O’Connor following the completion of its sale during the quarter. This was partly offset by higher performance fees in Unified Global Alternatives.

By the end of March, we delivered $14 billion of net new money, representing 3% annualized growth as we continue to benefit from our strategic focus on scalable differentiated capabilities. Flows were led by $13 billion into ETFs, reflecting sustained demand for our core product range launched last year, alongside robust net inflows of $5 billion into our SMA offering in the U.S.

UGA continued to build momentum, ending the quarter with $344 billion of invested assets and attracting new commitments of $12 billion, split 3 and 9 between Asset Management and Global Wealth Management. Inflows were broad-based across the platform with notably strong demand for private equity and hedge funds. Operating expenses were 2% lower as we maintain cost rigor while continuing to invest in the platform to support operational efficiency.

On to Slide 13 in the Investment Bank. The IB delivered its most profitable first quarter on record with pretax profit of $1.2 billion, up 75% and a pretax ROE of 25%. The performance this quarter reflected a market environment that played directly to our strengths as the business successfully captured opportunities while maintaining a disciplined approach to resource deployment. Revenues climbed 31% to $4 billion with both Global Banking and Global Markets contributing proportionately to top line growth.

Global Banking revenues rose by 30% to $733 million. Advisory revenues were 8% higher, driven by our strongest first quarter in M&A with notable performances in the Americas and EMEA. Capital Markets grew 45% with growth across products and geographies. We continue to benefit from our strategic investments in ECM where revenues more than doubled year-on-year, outperforming fee pools across all regions, supported by higher IPO, follow-on and convertible issuance. In DCM, we delivered double-digit growth, while LCM increased modestly against the lower fee pool.

Turning to Global Markets. The business posted its best quarterly performance on record. Revenues reached $3.3 billion as each of the Americas, APAC and EMEA, including Switzerland, generated more than $1 billion in revenues.

Equities revenues increased by 28%, driven by strength across cash equities, prime brokerage and equity derivatives. While FRC revenues rose 38%, led by a strong performance in FX, including precious metals. Sustained investment in technology, our globally diversified footprint and close integration with Global Wealth Management continue to support high levels of client engagement and momentum across the platform. Consistent with the strong revenue growth in the quarter, operating expenses increased by 17%.

On Slide 14, Non-core and Legacy's pretax loss was $97 million as negative revenues of $11 million and operating expenses of $160 million were partly offset by the credit loss release referenced earlier. Within revenues, funding costs of around $70 million were largely compensated by gains in the credit and securitized products portfolio. Excluding litigation, expenses in the quarter declined 70% year-on-year and 26% sequentially, bringing cumulative cost reductions versus the 2022 baseline to 84%.

Looking ahead, we continue to expect to exit 2026 with annualized operating expenses, excluding litigation of approximately $500 million and annualized net funding costs of less than $200 million. In addition to strong cost management, NCL has continued to successfully reduce and derisk its balance sheet since being established shortly after the Credit Suisse acquisition. Including an $800 million reduction in the first quarter, the team has exited around 93% of its credit and market risk RWA, bringing the March end balance substantially in line with its full year 2026 ambition.

To sum up, our 1Q performance demonstrates the progress we're making across the group. We delivered strong financial results, completed client account migrations on the Swiss platform and continue to execute with discipline. As we move on to the final phases of integration, we are increasingly focused on positioning the firm for sustainable growth beyond 2026.

With that, let's open for questions.

[Operator Instructions]

Our first question comes from Flora Bocahut from Barclays.

So the first question I have is on the buyback. Obviously, you've changed the wording today on the buyback plan. You now intend to complete the $1 billion by the end of July, so by Q2 results. So the question is, what exactly drove the change? And can you maybe help us understand what are the key catalysts that you're going to watch into Q2 results to decide and what kind of magnitude should we have in mind? Should you be able to top up the buyback with Q2 results?

The second question is on GWM, specifically on APAC because the quarter was quite strong, both in terms of net new money, but also in terms of the loan deleveraging that we saw this quarter, the second in a row. So can you maybe talk a little more about the strength in APAC, What's driving it? And how sustainable do you think it is?

So thank you for the question. Yes. I mean, of course, we changed the language and it's basically the reflection of 2 of the 3, 4 conditions that is set or we described for the capital return plans for 2026, i.e., the successful progress in the integration, which was a major milestone was achieved with the migration of the Credit Suisse clients into -- onto the UBS platform. And this is now allowing us to basically decommission and realize the full synergies for -- that we have envisaged.

And then, second is the very strong business performance, which, as you saw, is allowing us to generate further capital. I think that these 2 conditions are making us comfortable that we can accelerate the current share buyback program by the execution of that by the end of July when we report Q2 results. While still keeping open the other 2 conditions. We want to continue to operate by year-end at around 14% CET1 capital. And of course, we are also watching the developments around the capital requirements. So at these 2 conditions are still out there. And I say that it's premature to talk about the magnitude of what we're going to do in the second half of the year.

Flora, on the second question regarding GWM in APAC. So clearly, the power of the integrated franchise is clearly contributing to growth and profitability, and you could just see that in the numbers that we have been printing quarter-on-quarter. Our focus, as you know, has been on growing assets across the region by deepening share of wallet by accelerating strategic partnerships and also by strengthening high net worth feeder channels, particularly through investments in digital and also by ramping up the impact on hiring of select advisers.

So we think the evidence of this is apparent in the 1Q '26 results, double-digit NNA and FGA growth with very strong mandate penetration, while also continuing to drive its bellwether, which is transactional revenues in an environment where our advice and structuring expertise are clearly differentiated. I would also say that on your question regarding lending, lower U.S. dollar rates, are also supportive of the lending growth that we've seen.

Next question comes from Kian Abouhossein from JPMorgan.

First of all, Todd or Sergio, thanks for answering all our questions for -- if my math is right, 12.5 years and hopefully longer to go. Now my 2 questions are, first of all, in relation to U.S. Wealth Management you had positive net assets in Americas. You talked prior about potential outflows in the first half. And you indicated in the second quarter, clearly due to tax situation that could happen. But I just try to understand how we should think about what happened in the first quarter relative to your earlier guidance in particular?

And secondly, in that context also advisory -- advisory departures, are we done with that? As you mentioned, acceleration of hiring. So should we expect net new hires to come through second half? And then the second question is coming back to parent bank capital. You mentioned the $1.8 billion accrual. I'm interested in the cumulative reserves in the parent bank at the moment? And how much have you actually upstreamed in the first quarter?

Kian, thanks for the questions. On the second one, just quickly. So we -- if you recall, we had accrued $9 billion last year, and we have paid up the first half of that in the first half of the year, the $4.5 billion actually just earlier this month. And the $1.8 billion is an accrual, I mentioned that we would distribute in 2027.

On the question regarding U.S. wealth and flows. So first, let me just back up a little bit and mention that importantly, the U.S. business is continuing to work on the various levers to drive profitability growth with pretax margin improving now for 6 consecutive quarters. That momentum is being driven by stronger banking capabilities, which is evidenced in, by the way, continued growth in net new lending 8 consecutive quarters and by the strength in transaction revenues, including through greater collaboration with the Investment Bank and delivering the full breadth of our capabilities to clients.

Now on to flows this quarter. We're encouraged by the outcome, particularly because flows were driven by same-store production. So that tells me the strategy is working. At the same time, in terms of guidance, at the same time, it's 1 quarter, I guided on second quarter tax outflows. So we're staying focused on continuing to invest in our adviser workforce, in our platform and our capabilities to drive sustainable profitability improvement.

Sorry, should we think about net advisers increasing as of second half?

So that Kian, I'd just say we're comfortable with the steps we're taking to drive positive full year NNA while recognizing there's a lag effect from previously announced FA movement that will continue to show up in flows for a few quarters. That said, we're actively recruiting and investing in teams aligned with our profitability ambitions. I'd also point out that rotation among FAs remains elevated across the industry given record valuations, but we continue to expect these dynamics to normalize in our own book over the course of 2026.

Okay. And just on reserves, can you just remind me what the cumulative reserve is in the parent bank now?

So we have $10.8 billion of capital in reserve less the $4.5 billion paid up in April that I mentioned.

The next question comes from Stefan Stalmann from Autonomous Research.

I wanted to ask, please, whether you have actually seen or whether you expect to see any benefits from wealthy clients in the Middle East potentially shifting their assets into Swiss or maybe Asian booking centers. And also on your Unified Global Alternatives platform, there's obviously been quite a lot of inflow during the quarter and maybe already starting last year about private markets, in particular, private credit. Are you seeing any impact of all of that market talk in your clients' behavior and your clients' preferences in that area?

Stefan, I think it's fair to say in respect of the Middle East conflict that safety and balance sheet trust remain decisive factors in Wealth Management, as you know, and the Gulf conflict is reinforcing these priorities. And while it's very early to see any meaningful movement, we believe it's leading some clients at least to reassess booking center options. And we believe that we -- our deep and long-standing relationships with Middle Eastern clients position us well. Were there to be movement to benefit from any shifting dynamics over time. But at this stage, clearly too early to see anything coming through the numbers.

On your question regarding private credit, I think it's fair to say that interest in private credit, among our wealthy clients has been more measured in the current environment that clearly reflecting macro uncertainty and a preference for fluidity and capital preservation.

We have seen, as I think you're pointing out, elevated redemption requests that are driven by either profit-taking or residual gating or even liquidity alignment considerations. That being said, engagement does still remain high, and we continue to see demand building for well-structured strategies in private credit as part of this income sleeve, albeit with more caution and selectivity.

It is also worth pointing out that when you look at the level of exposure our clients have in private credit in their portfolios, it's quite minor. So while you may have sort of mid-single-digit percentage in alternatives more broadly, it's a fraction of that in private credit. But that said, we still see that there is demand for that type of investment when structured properly.

The next question comes from Anke Reingen from RBC.

The first is just on the ordinance impact. And I was wondering when you assess your capital ratio, do you look on a phased in or on a fully loaded basis? I guess the $2 billion already coming in 1st of Jan 2027 and then '29 so if you can just tell us fully loaded or phased in, what the assessment is?

And then with Q4 results, you gave us some net interest income guidance for the full year for Global Wealth Management and P&C. And I just wonder if this has changed given the interest rate outlook?

Thanks, Anke. So on the ordinance impact, so just to unpack it, so the changes to prudential valuation adjustments come in on 1 January 2027. So there is no phase-in. So when we get there, we'll be reflecting that in our capital is the expectation immediately. On software, there is a transition period permitted to 1 Jan 2029, which at this point is our intention to fully utilize, but that's subject to seeing the full package develop in the intervening period, but we are considering that. And at this point, that the intention is to use the transition period and therefore, have the impact of capitalized software, hit through our capital ratio on 1 January 2029.

On NII guidance, I would just say that in 2Q, the - my outlook for the second quarter really reflects in Global Wealth Management, in any case, lower U.S. dollar rates that, as I mentioned in my comments, that have some downward pressure on deposit margin. Why is that? Because asset yields as reflected in our replicating portfolio is repriced down faster than deposits when rates are lower.

Now any further upside in the quarter can come from favorable deposit mix shifts as we saw in 1Q and even stronger net new lending growth. So there is that upside. But again, because of the impact on rates that's what informed my guide at flat quarter-on-quarter.

Now the longer-term prospects for any pickup in GWM would be based on continued loan growth and greater U.S. dollar rate stability. And that would lead to higher swap rates that would start to help ease the reinvestment headwinds from the replicating portfolio that is reflected in the current sequential outlook. So that, coupled with expected deposit growth without any meaningful dilution in our sweep and current account balances could offer some longer-term upside for NII in GWM.

The next question comes from Joseph Dickerson from Jefferies.

Just on the parliamentary process that is obviously quite key to the shape of prospective buybacks this year and beyond. I guess what is the outcome that you're looking for from this process?

Thank you. Well, we keep that -- we fully understand that all the lessons learned from the Credit Suisse crisis have to be reflected in how we adapt the regulatory framework in Switzerland. But we continue to believe that the guiding principle should be to have something that is internationally aligned.

And as allow us to continue to be competitive as a bank based in Switzerland. So I think that the framework are quite clear. So we are not asking for anything that I would say is exceptional. I think that's -- and the most important issue is that when we go through this process, as I reiterated, is not only to address the quality of capital and how we look at improving that part is to fully reflect the lessons learned of the Credit Suisse crisis, the root causes. We all know that huge concessions were given to Credit Suisse.

And this is the reason why at the end, they had a problem with their foreign subsidiaries. And this element is actually never mentioned in the public debate. So we need to make sure that the people that will make decision fully understand how strong the current regulatory framework is and which, by the way, is the one that allowed a G-SIB to absorb a G-SIBs, repay all guarantees and emergency liquidity provisions granted to Credit Suisse within 5 months.

And while keeping you investors fairly confident about our ability to manage our business. So one has to reflect this kind of true lessons learned from the crisis rather than just looking at absolute level of capital and go to extreme solutions that are not helping at the end of the day, not only the bank but most importantly, our clients because at the end of the day, it's going to make the bank less competitive and in serving households, corporate clients and it's not very good for the country as well, I believe.

The next question comes from Chris Hallam from Goldman Sachs.

Two questions. First, on capital. So I guess I agree on the $22 billion number on Slide 25 is cleaner to look at than the $9 billion and also that CET1 versus peer requirements is probably more logical than versus peer reported ratios. But when it comes to contingency planning and the decisions that need to be taken, the foreign participation process should stretch well into the first half of next year. Given the transition period on those potential changes, can you wait for full clarity on the outcome of that process before making any decisions on how to adjust your operating footprint or your focus areas? Or are you going to have to start making real-world business decisions earlier than the point at which you get full and final clarity on foreign subs. That's the first question.

And secondly, a broader one on cyber risk, sort of against the backdrop of the recent acceleration we've seen in AI-enabled threat detection and attack sophistication. Could you talk a little bit about how you're managing cyber resilience, both on your own platforms as well as through the integration -- through the CS integration? Have those sort of AI-driven threat models changed how you assess residual risks in your legacy systems? And should we expect any incremental investment or operational constraints as a result of that evolving threat landscape?

Thank you, Chris. I guess for -- to be fair, we have been going through 2 years of uncertainty around this topic. And by now, it is something that is almost embedded in the way we have to operate and accept it as a modus operandi. It's not ideal because, of course, the environment out there is quite challenging. But I think that we are pleased that we at least completed the integration, and we created the resilience in terms of profitability that allow us to basically accept the fact that the democratic process has now to go through.

This is a very complex matter. And it's not reasonable now to expect that the parliament will take decision in a very short period of time on such a situation, considering also the extreme different views on how this is playing out.

So I think that one thing is clear. We're not going to jump into conclusions or taking decisions that have a strategic impact in any sense before having the final outcome. It's not ideal, I know, but we have to really think about what is the best things for the bank for the next 5, 10, 20 years, not what is good for the next few quarters.

And that uncertainty, unfortunately, is something that we have to live with. We are not in control of that, but we are hopeful that the situation can get resolved very quickly. In terms of cyber, Well, look, of course, cyber is not something that we -- has been at the center of the radar screen for the last few years for all of us in the industry, but not only in the financial services industry. And we are investing a lot of resources, technology, but also human resources to really identify the best way to protect our assets, our clients' assets and the data. And we continue to do so as we see also these recent developments. Believe me, we are staying very close talking to our technology partners.

As you can imagine, we are a client of the major technology providers, also the one that are very deep involved in this recent discovery. And so we get indirectly also the benefits of being able to implement all the necessary steps to protect our assets. So this is going to continue to be a big, big issue and one that will continue to necessitate a lot of investments and resources, both in technology, but also in people. So you look through cyber risk is as important as credit and market risk nowadays.

The next question comes from Andrew Coombs from Citi.

One on the Investment Bank and one coming back on Asia Wealth Management, please. Firstly, on the Investment Bank, just putting the legislation to one side, we've had the Basel III endgame proposals in the U.S. So intrigued what you think that means in terms of the level of competition that you're going to see from the U.S. investment banks in that space? And also, if I go back all the way to your 2018 Investor Day, I recall you had this ambition of having 40% of the division's profits from advisory and execution and 60% from financing and structured derivatives, obviously, more capital intensive. A lot has moved on since then. So is that 40%, 60% split still a fair assumption? Or is it very different now? And then my second question on APAC GWM. You specifically called out Australia, Taiwan, Japan and some of the regions where you're making selective hires. Can you just talk a bit more about onshore versus offshore trends you're seeing and how that's influencing your investment decision process?

Andy, so in terms of Basel III in the end game in -- on capital in the U.S., at least the proposals. Look, I think it's fair to say that the U.S. banks have a fair bit of dry powder when it comes to capital deployment that seems pretty apparent to anyone watching. And we're obviously competing in that globally. Our global footprint, we think differentiates us. Our capital-light approach differentiates us. And we're competing really well in that -- in the environment in the investment bank sectors in which we are choosing to play. So for us, we recognize what's -- we recognize the fierce competition, but we like our chances.

In terms of the split from years ago on your question, I think I'd go back and check myself and do the math, but I don't think that that's massively off. I'd probably flip the ratios a bit if I had to offer a guess, but I think it's probably not terribly off. It's also important to mention a lot of the financing also could be done in quite resource-efficient ways. And so -- because you had mentioned that the latter is much more resource intense and doesn't have to be that way in some of the activities vis-a-vis Prime. So -- but my instinct is I'd flip the ratio the other way. In terms of APAC, I mean, I've been pretty clear that investing already to build out on our strongholds. I touched on already in a prior response the things that we're doing to drive further performance and growth in the region. We're looking to leverage our leadership position into these jurisdictions where we're doing the parts of Asia Pacific where we can even grow faster and further. And that's why we call out some of these growth markets within Asia Pacific on top of our own stronghold. And we see -- look, the onshore/offshore dynamic still, for sure, exists, but we're also so well positioned in Greater China that we're able to leverage both sides of that.

The next question comes from Jeremy Sigee from BNP Paribas.

Just a couple of follow-ups on continuing on Wealth Management, please. Firstly, on the U.S. business, you touched on -- you had another 50 adviser reduction in the quarter. Is that a lag effect from the sort of exits you were seeing last year? Or is it fresh departures, fresh poaching that you're suffering this year? That's my first question.

And then second question is just continuing on the strength that is phenomenal in Asia and in EMEA in Wealth Management. I just wondered what client conversations you're having? And to what extent that's driven by fear factors such as macro risks or whether it's more a pickup in wealth creation and animal spirits and investment appetite coming from that?

Yes, Jeremy. So on the U.S. business side, yes, the headcount metrics you see are actual. So what that means is there's a lag effect built in, i.e., when advisers leave the roles. So there's also -- it's very similar to flows themselves, which was the point I mentioned earlier, I think, in response to Kian's question. So there is a lag effect in some of the measures we print around headcount and flows, and that's why I've been also giving a broader picture on the topic, so that there's also an outlook and people can understand the broader dynamic.

So across -- so across the Wealth Management business, look, the -- you asked about the environment and the sentiment. So clearly, what we've been seeing is the backdrop, if I characterize the first quarter, especially the latter part, once the Gulf conflict got underway, that has led clients to remain invested while actively rebalancing and hedging their portfolios.

And that's supporting strong demand for structured products, FX solutions and equity derivatives with healthy volumes and disciplined risk usage. It's important to also add that our advisers are following the CIO blueprint. And so the conversations are often reflecting CIO views, direction, and that's informing transactional preferences and also as you see a lot of people entrusting us to manage on an advisory or discretionary basis, their wealth, and we see mandate penetration at a record high. So in that sense, the discussions that we're having with clients are resonating.

The next question comes from Goel Amit from Mediobanca.

So 2 questions for me on capital. The first one is just on actually the CET1 leverage ratio and buffer. So I'm just wondering what kind of buffer would you be looking to run at versus end-state requirements. It looks to me like that's going to about 3.9%, post the ordinance has been kind of written pro forma the current -- or the kind of the buffer looks like it won't be particularly big.

So just curious what kind of level you're thinking about there?

And then secondly, just in terms of share buyback capacity this year. I appreciate it's subject to parliamentary debate in terms of what may or may not happen. But it looks like there's about $5 billion left of the stand-alone AG reserve after dividends and employee share repurchase. So just curious whether you're then happy to continue to run the equity double leverage at the group at 104% and/or, if you would be happy to increase that to give yourself capacity to pay more? Or are you still looking to bring that closer to the 100% mark?

Yes, Amit. So First, on the leverage ratio. I mean I think it's fair to say that at the moment, the Tier 1 leverage ratio at the group and UBS AG consolidated is marginally the most marginally constrained metric that we have when you look at buffers relative to minimum requirements. So while -- if you think about it, the risk density under the Swiss systemically relevant bank capital rules would suggest about 1/3 of density.

We're running around 30%. Why is that? Just given that the FX sensitivities, so dollar weakness is more pronounced vis-a-vis leveraged vis-a-vis leverage and so -- and we're obviously able to run the bank with significant RWA efficiency in the business despite Basel III and op risk.

So that's where we are at this point. So we're managing -- my expectation and hope is always to manage both of those ratios where possible as no more marginally constraining than the other. But given the FX movements over the last year, that's made leverage ratio more constraining.

And so we're very focused on ensuring -- we manage that well. You see that in how we pace intercompany dividends from AG to Group, how we're building our AT1 stack and also how we are transforming deposit liabilities wherever possible to maximize funding value.

Listen, on the share buyback capacity and ultimately equity double leverage. It's premature to talk about where we would go on this. We have to wait and see where Sergio just mentioned in response to Chris' question, we have to take those few quarters and see where this plays out. And then once we have that visibility, that clarity, then we can come back and talk about things like the equity double leverage ratio for now, our expectation is still to have that move towards pre Credit Suisse acquisition levels that remains the base case for us.

The next question comes from Giulia Aurora Miotto from Morgan Stanley.

I have 2, both on the margins in GWM, one on the U.S., one on Asia. So in the U.S., UBS got the final approval on the banking license late in the quarter 20th of March. And yet we saw good progress on loans and deposits and PBT margins already close to 14%. So I'm wondering how does this last approval changed the pace of improvement in your profitability metrics in the U.S. So can we see now a step up in the deposit loan growth and ultimately in profitability? Or will that be gradual? First question.

Second question, the PBT target, excluding the U.S. in terms of margin, is to be about 40%, and Asia is standing out close to 49% in the quarter. And you say that there is still room to improve or maintain this level of margins? Or perhaps it was an extraordinary quarter and we would go back to close to 40 going forward?

Thank you. Just to maybe on the second one first, we're obviously quite encouraged by our 1Q performance across the board, including in APAC Wealth and it demonstrates the capacity and the franchise as I've mentioned, at the same time, the overall performance for the group. It's one quarter. The quarter was exceptionally strong and the macro environment remains uncertain. So if the environment is supportive, there's potential upside for some of these measures. But generally, I wouldn't be extrapolating 1Q per se for a full year, and it's just premature to reflect any of that in our guidance at this stage.

On the banking license point, I think -- well, first, we're pleased that you see the progress that we're making also in the pretax margin. We're delighted that we have the license now. Those have always been in our plan. The team has been very effective in being able to land it, but it has been in our plan and our outlook, and it's what helps to drive the pretax margin improvement over time. What I would say about it is we're already doing the things. We're building out the capabilities, but also more the focus across the adviser group in the U.S. around the banking capabilities that we have. I think, has been an eye opener for a lot of advisers who haven't leaned into our ability to support them on that side of the business, and it really has helped, and that's been driving some of the results that we keep seeing quarter-on-quarter in banking.

Having a license will only accelerate that. It will also help to shape the deposit side of the balance sheet even better because it will create the opportunity to have more operational deposits and reshape the loan-to-deposit ratio in a way that will help to create a pretax margin accretion.

The last question comes from Benjamin Goy from Deutsche Bank.

And maybe just 2 follow-up questions. And the first is on geopolitical uncertainty, normally that was negatively correlated to our transaction activity of clients where it seems like there's more buy-on-the-dip mentality or just holding on to risk assets just interesting how it might have changed over the last couple of years?

And then you touched on your capital-light focus in investment bank, but is it possible somewhere to give a flavor and look at the leverage exposure expansion in the double digits? How much was the market's underlying opportunities. So call it cyclical? And how much is just more competition from U.S. players?

I do not get the first question, sorry, it may have been me. sorry, but let me answer the second one. I was able to think to glean. The increase in leverage at the investment bank, simple, it was just the activity levels in the quarter that informed sort of traditional liquidity needs vis-a-vis clients -- and so that's what drove the balance sheet higher was the very active levels that we saw with clients over the course of the quarter. Do you mind repeating the first, sorry?

And then the first one is geopolitical uncertainty is probably as high as in decades. Nevertheless, your transaction activity remains very positive. So wondering whether that fundamental negative correlation between the two has changed and your clients are more engaged in risk assets sustainably. -- maybe too confusing, we can take it offline.

Yes. Thanks, Ben. We just got the question. Sorry. I think it may be the audio. So yes, so in respect of geopolitical uncertainty, look, I mean, in the near term, and we've seen this just in recent times when there are sort of events that create volatility in the markets. We saw that a year ago when the U.S. tariffs were announced in early April when this conflict started, and you could probably go back on a time line and see, there is volatility. And the question really comes down -- it really boils down to whether the volatility remains constructive or it is front-running what is going to be quite a difficult market environment and risk off. And so I think -- and you'll have your own views on this as well.

But I think as the market is priced in a nearer-term diplomatic solution to the conflict I think people have stayed invested, albeit there's been some caution, maybe investing strategies have changed, more protecting principal, more from looking at things from a hedging transaction perspective. But by and large, people are staying invested despite all the geopolitical uncertainty.

As we say, even in our outlook, things could change quickly, and we recognize that when you look at the outlook -- when you look at the environment, for example, if a diplomatic solution was not seen as something that can be enduring and achievable in the near term, that can change. And then at that point, we'd have to see. But certainly, near-term volatility created opportunities as long as clients remained engaged in seeking the advice we provide.

Thank you. I think that ends all the questions. I just thank you very much for joining, and we look forward to updating you with our second quarter results at the end of July. Thank you.

Valued shareholders, ladies and gentlemen, I warmly welcome you to this Annual General Meeting of UBS Group AG here in Basel. I also welcome the viewers who are following the AGM live on the Internet. In accordance with Article 13 of the Articles of Association of UBS Group AG, I formally open the AGM, take the chair and introduce the participants who will support me here on the stage today. Starting on your far left, Todd Tuckner, the Group CFO; Barbara Levi, our Group General Counsel; Sergio Ermotti, the Group CEO; Lukas Gahwiler, the Vice Chairman; and on my left, Michael Schoch, our Group Company Secretary.

With this, I nominate Michael Schoch as the Secretary for today's AGM. Further, I warmly welcome the members of the Board of Directors. I also welcome the independent proxy, Altorfer Duss & Beilstein AG, Zurich, represented by Dr. Larissa Marolda. I'm also pleased to welcome BDO AG Solothurn, which is responsible for counting the votes and represented by Ms. Laura von Arx and the notary, Ms. Karolina Dobry Oesch from Ludwig + Partner AG, Basel, who will publicly certify the ordinary reduction of share capital under agenda Item 10. Finally, I would like to welcome the representatives of the statutory auditors, Ernst & Young Limited, in particular, the lead auditors for the 2025 financial year.

On the 5th of January 2026, we published a notice in the Swiss Official Gazette of Commerce and on our website inviting qualifying shareholders to submit their written request for items to be placed on the agenda or motions to agenda items by the 16th of February 2026. No requests were submitted. The invitation to today's AGM was published in the Swiss Official Gazette of Commerce on the 16th of March 2026 and is also available on our AGM website.

I conclude that the convening of the Annual General Meeting was duly conducted in accordance with law and our Articles of Association at the annual meeting, Annual General Meeting, therefore, has a quorum. As usual, we maintain a list of speakers. I invite any shareholders who wish to take the floor to register at the speaking desk located at the front left of the hall. You will be called when the agenda item you wish to speak on is addressed.

In accordance with Article 17 Paragraph 1 of the Articles of Association of UBS Group AG, today's votes will be decided by a majority of the votes represented with blank and invalid votes excluded. Please note that the AGM will be audio and video recorded. These recordings will serve as the basis for the minutes, and it will also be broadcast live on the Internet.

Ladies and gentlemen, esteemed shareholders, welcome to UBS' Annual General Meeting. This is a pivotal moment for UBS in Switzerland. The current regulatory debate in our home country would not only shape the future of the firm, but also the future of the Swiss financial center. But before I elaborate more on these points, let me first reflect on what we have achieved over the past year and where we stand.

We are now firmly in the final stage, the last mile of the integration of Credit Suisse. One month ago, we completed the migration of all former Credit Suisse clients booked in Switzerland onto our platforms. We remain on track to substantially complete the integration by the end of the year. It is worth remembering that the integration of Credit Suisse was never an end in itself. It was a means to safeguard financial stability and preserve confidence in the Swiss and global financial system.

The scale of this integration cannot be overstated. Many international regulators agreed that a UBS takeover was the best solution, but they were very worried about the complexity of the transaction. They now recognize it, progressed smoothly, and we have managed it very successfully. This was only possible, thanks to the extraordinary dedication and professionalism of our outstanding employees.

I would like to express my sincere thanks to everyone involved. Our employees have truly made history. And I'm particularly grateful to Sergio Ermotti and the entire leadership team. We are fortunate to have such depth of experience and capability at the top of our firm. Sergio will see the integration through to completion and then focus on driving growth and sustainably higher returns. He will also lead UBS through this period of regulatory uncertainty.

Turning to our financial performance. 2025 was a very strong year for UBS. Net profit rose 53% to USD 7.8 billion on the year. Group invested assets increased by 15% to more than USD 7 trillion. This demonstrates that even as we execute a complex transaction and integration, our strategy is working. Sergio will provide further details on the integration and our financial performance.

You all know how close the UBS is intertwined with the Swiss economy and society. We are the third -- nation's third largest private employer. Furthermore, we are the third largest private sector provider of vocational education and training in Switzerland with more than 2,300 apprenticeship and continuing education positions. Last year, we purchased goods and services domestically worth CHF 4 billion. We're the country's largest creditor with a total lending commitment to Swiss households and companies of approximately CHF 350 billion.

Last year alone, we granted or renewed CHF 80 billion in loans, helping thousands of Swiss families buy their first homes and supporting businesses from St. Gallen to Geneva in expanding their operations. We support culture, education and sports with a substantial contribution in the mid-double-digit million range. We fund the UBS Center for Economics and Society at the University of Zurich. We sponsored the Athletissima Lausanne, and we are the main partner of the Locarno Film Festival and the Swiss Football Association, among other words.

In other words, we are as much an integral part of Switzerland as our Swiss heritage is part of us. However, the additional capital requirements proposed by the Federal Council would make us an international outlier and weaken us compared to our competitors as shown on this slide. According to our own calculations, the proposals would require UBS AG to hold additional common equity Tier 1 CET1 capital of around USD 22 billion. This would result in a common equity Tier 1 capital ratio of around 18.5% at UBS Group AG level.

It is important for you to know that this common equity Tier 1 capital ratio is about 50% higher than those of our main competitors, which is a source of significant concern for us. Recently, we have experienced what high tariffs can mean. Imagine other Swiss industries operating with 50% higher tariffs than their international peers. This will clearly be a significant disadvantage to competitors as burden of that scale would fundamentally disrupt our business model.

Let me talk for a moment about the size of UBS, which is depicted on the next slide. Since the global crisis, the financial crisis, the GFC in 2008, the bank has massively reduced its balance sheet. The combined balance sheet of UBS and Credit Suisse has been reduced by more than 2/3. Importantly, UBS has also reduced the risk profile by focusing on Wealth Management and the Swiss Universal Bank in our home country. Both are stable and low-risk business areas. 3/4 of our revenue now come from our asset gathering activities and our Swiss operations. The absolute balance sheet footprint of the investment bank has fallen by nearly 90%.

Alongside the shift in our business model, our capital position has trebled. Total loss-absorbing capital now covers 38% of our risk-weighted assets. Our balance sheet is often compared to Switzerland's gross domestic product. Today, it corresponds to 150% of Swiss annual GDP. Well, this is 4x -- more than 4x smaller than the combined balance sheets of UBS and Credit Suisse were before the global financial crisis when they exceeded 600% of GDP.

However, I think comparing a bank's balance sheet with the country's GDP is comparing apples with oranges. If anything, you would have to compare the bank's balance sheet with the balance sheet of the country itself, and Switzerland's balance sheet is exceptionally large and exceptionally strong. Taken together across households, corporates and the government, Switzerland's financial assets amount to around 16x GDP. The Swiss National Bank's balance sheet alone is 100% of GDP.

According to our global wealth report, Switzerland is the richest country in the world with average net wealth of almost USD 700,000 per adult. Including real estate, net household wealth is almost 600% of GDP. Bank's balance sheets are mirrors of the economy they serve. Switzerland's banking system overall is around 400% of GDP reflects the size, sophistication and international footprint of the Swiss economy.

Viewed in this context, we believe that the size of UBS seems appropriate. That said, vigilance remains essential and financial stability must be safeguarded. There is no question that the regulatory authority should and must fulfill its role, yet the benefits of regulatory restrictions must be weighed against the impact on competitiveness.

Notably, both the United States and the United Kingdom have included a competitiveness mandate for their regulators alongside investor protection and financial stability. Even the Swiss National Bank acknowledges that sustainable bank profits constitute the first line of defense for absorbing losses in a stress event. And moreover, FINMA's own mandate explicitly refers to contributing to the competitiveness of the Switzerland's financial center.

Now some would like us not to lobby at all, but people need to recognize that we have a fiduciary duty to you, our shareholders. We need to safeguard the future of our firm and to represent your interests. We, as those affected by the proposed regulation, must think about what these proposals mean for us and what consequences it would have for Switzerland.

We must also protect the livelihoods of our more than 30,000 employees and their families in Switzerland. In our assessment, the current proposals materially undermine Swiss competitiveness while offering little meaningful improvement to financial stability. Again, we firmly believe that well-capitalized banks are a cornerstone of financial stability. However, reducing our own competitiveness would be reckless in today's geopolitical environment.

The international rules-based order is weakening. Major jurisdictions are pursuing explicit regulatory agendas to stimulate domestic growth and strengthen the global reach of their own financial institutions. In the United States, stress testing has been simplified and a digital assets regime is being developed. Furthermore, the Federal Reserve presented new plans in March to further cut banks risk-based capital requirements. For the largest U.S. banks, including our direct competitors, common equity Tier 1 requirements are expected to fall by 4.8% in aggregate.

In the United Kingdom, capital requirements are estimated to decline by 1 percentage point, and the Bank of England has a mandate to consider the economic impact of capital requirements. And even our dear friends, the European Union are pursuing regulatory simplification with growing pressure to give greater weight to competitiveness. The EU is expected to delay an increase in capital requirements related to the fundamental review of the trading book by up to 3 years.

Meanwhile, competition is intensifying. Financial centers such as Singapore or Hong Kong are strengthening their competitiveness in areas where Switzerland has traditionally been strong, including cross-border wealth management with the stated ambition to take the leading role. When geopolitics shift, small and open economies must stay agile to thrive. They need smart, internationally aligned regulation that bolsters rather than blunt competitiveness. Yet in financial services, the Federal Council's proposals are moving Switzerland in the opposite direction, and they have little to do with addressing the root causes of the Credit Suisse issues.

Let me be clear, we want to remain headquartered in Switzerland. We have consistently sought and continue to seek a constructive outcome. We are looking for a solution that preserves a competitive, successful and prosperous Swiss financial center based on strong capitalization. We stand ready to work closely with the Finance Ministry, the Swiss National Bank, FINMA and Parliament on a pragmatic regulatory agenda.

We must reinforce financial stability while strengthening competitiveness through targeted, proportionate and internationally aligned regulation that supports the financial sector and Switzerland's long-term prosperity. In the meantime, it is our duty to evaluate appropriate measures to address, if confirmed, the negative effects of these extreme proposals in order to minimize the impact on our shareholders, clients, employees and the communities in which we operate.

Against this backdrop and amid growing pressure from markets and from many of you, our shareholders, key business decisions may soon become unavoidable. Again, I would like to emphasize that we continue to seek a workable outcome. We remain committed to our successful and proven strategy, centered on growing our asset gathering activities. We rule out any shrinking of our value-generating businesses.

Dear shareholders, 2025 was a successful year for UBS, and you were the primary beneficiaries. Last year, we returned USD 6.4 billion of total capital to you. That included USD 3.4 billion in dividends with the remainder delivered through share repurchases. For 2025, we propose a dividend of USD 1.10 per share, representing an increase of 22% over last year. We also intend to repurchase USD 3 billion of shares in 2026. This is a moderate amount, significantly less than in 2022 before the acquisition of Credit Suisse.

For 2026, we are accruing for a mid-teens percent increase in dividend per share. Beyond that, we remain committed to a progressive dividend complemented by share repurchases. While we have the ambition to do more, any additional share repurchases are going to be subject to further clarity around the future regulatory regime in Switzerland, our financial performance and maintaining a CET1 capital ratio of around 14%.

With most of the integration work now behind us, our ambition is clear to restore and over time, surpass our pre-acquisition levels of profitability. Our strategy remains unchanged. It has served us well and will continue to guide us. We aim to remain Switzerland's leading universal bank and the bank of choice for the wealthy of the world, supported by strong capabilities in asset management and investment banking.

We have particular ambitions in Asia, the world's fastest-growing wealth market and in the United States, the world's largest wealth market. The approval last month for a national bank charter in the U.S. represents a significant milestone. We will also continue to build up our already strong Europe, Middle East and Africa franchises.

Artificial intelligence is playing an increasingly important role in achieving these goals. We are adopting this technology across the firm through several cross-functional products. Our stakeholders rightly expect us to play an active role in supporting the transition to a low-carbon economy. We take this responsibility seriously. We continue to see strong demand for advice products and solutions in this area.

UBS has long been a leader in sustainability, and we remain firmly committed to maintaining this position. UBS is committed to sustainability as a core value that sets us apart. Our progress there is reflected in external assessments. MSCI reaffirmed our AA score, and we continue to perform strongly in the S&P Global Corporate Sustainability Assessment.

Let me conclude. We are nearing the completion of the Credit Suisse integration. Our strategy is working. The world is getting wealthier, and UBS is exceptionally well positioned to participate in that growth while remaining firmly anchored in Switzerland. I'm convinced that this is a winning model for the future.

At the same time, the Federal Council's regulatory proposals represent a serious risk to that model. They would fundamentally disrupt our business model. It is both our right and our duty to contribute our perspective to the regulatory discussion in Switzerland. Before conclude, I would like to extend my sincere thanks to Lukas Gahwiler, Vice Chairman of the Board, who will not stand for reelection, unfortunately. Lukas has served UBS in numerous leadership roles over many years. Since 2022, he's been Vice Chairman of the UBS Group Board. As the final Chairman of Credit Suisse AG, he played a pivotal role in the successful integration of Credit Suisse into UBS.

On behalf of the Board of Directors and very much personally, I would like to thank Lukas for his outstanding contributions and unrelenting commitment to UBS. It has been a privilege to work alongside him. We wish him every success in the next chapter of his professional and private life. I would also like to thank Bill Dudley and Jeanette Wong on behalf of the Board for their steadfast commitment and significant contributions over the past years. So thank you very much for you too as well.

Furthermore, let me express my sincere appreciation to our clients for their continued trust to our employees for their dedication and hard work, particularly their exceptional commitment throughout the integration progress and to our Group CEO, Sergio Ermotti and the Group Executive Board for their exemplary leadership, to my fellow members of the Board of Directors for their guidance and support and to you, our shareholders, for your confidence in UBS. Thank you for your attention and for your support and the proposals presented to you today. Let me now hand over to Sergio. Sergio?

Thank you, Colm. [Interpreted] Ladies and gentlemen, dear shareholders, I would also like to extend a warm welcome to you here in Basel and to everyone joining us online. 2025 was yet another good year for UBS. We owe this to the strength of our global and well-positioned business model. In a market environment characterized by greater uncertainty and volatility, we remained close to our clients. We supported the Swiss economy and have achieved a very good financial result.

As you can see in this chart behind me, net profit for the past year amounted to USD 7.8 billion. The return on common equity Tier 1 capital was 10.8%. On an underlying basis, it stood at 13.7%. This reflects the consistent implementation of our strategy, high operational efficiency and the exceptional commitment from our employees. We're on track to achieving a return on common equity Tier 1 capital of 15% on an underlying basis as well as a cost/income ratio of less than 70% by the end of 2026.

As our Chairman of the Board of Directors has mentioned already, the last customers in Switzerland were successfully migrated to UBS Systems in March. This means we have essentially completed migration of around 1.2 million client relationships worldwide. We've also completed the integration across the various business units and in central group functions. We have further significantly reduced our legal risks as well as IT applications, risks and capital requirements of the noncore and legacy unit.

At the end of the fourth quarter of 2025, risk-weighted assets have fallen by 2/3. This enabled us to release nearly $8 billion in capital since 2023. By the end of the first quarter of 2026, we decommissioned 60% of IT applications we no longer required, taken 76,000 of 106,000 servers offline and closed 10 of 16 data centers.

We have also further reduced costs across the group. By the end of 2025, we had achieved gross savings of $10.7 billion, and we've identified further savings potential. We've, therefore, increased our cost target -- cost savings target by $500 million to around $13.5 billion by the end of 2026.

Optimization of our balance sheet is now largely complete. This enables us to achieve a return of around 10% over the cycle relative to average risk-weighted assets. It is remarkable how strong and profitable our business units have evolved in recent years. As you can see from this chart, they're presenting solid regional diversification and are achieving earnings in the billions and this at strong growth.

As our Chairman has emphasized, none of these achievements were guaranteed when we acquired Credit Suisse in 2023. The pace and precision of integration have been exceptional. With this, all UBS employees deserve our sincere thanks. However, we are not quite there yet. But with every step we're taking, we are moving closer to planned completion of the integration by the end of the year. Then we'll be able to realize the full benefits of the acquisition through sustainably higher returns through a yet better client experience and through positive impacts on the communities in which we live and work.

Our guiding principle remains unchanged. We aim to achieve sustainable growth based on capital discipline, a prudent approach to risk, our expertise and our strength as the world's largest global asset manager. Global Wealth management remains at the heart of our business model, which is focused on asset management.

It is a key driver of stable, sustainable profitability. Asset inflows in 2025 amounted to $101 billion. By 2028, we aim to achieve inflows in excess of $200 billion per year. The cost/income ratio should then stand at around 68%. We aim to achieve this by deepening our client relationships and expanding our offering in all regions. In the U.S. wealth management revenue generated around 60%, which is the largest part of our business. We recently obtained a national banking license there. This is a significant milestone. It allows us to offer a much broader range of products and services to private clients, including traditional bank accounts.

This will make our U.S. business more resilient and profitable. In Latin America, we aim to further strengthen our position as the leading asset manager, focusing on Brazil and Mexico. In the Asia Pacific region, we increased assets under management to over $1 trillion. This consolidates our position as the largest asset manager in the region. We aim to further expand our share of wallet across the entire region through strategic partnerships, additional distribution channels and more relationship managers, client advisers.

Our leading position in Europe and the Middle East is based on a profitable platform offering cross-border services and booked in Switzerland. This offering is in particularly high demand in the Middle East, where our business has almost doubled since 2023. And Switzerland is an important anchor of stability for our Wealth Management business. This is underpinned by our long-standing and broad-based client relationships.

Personal and corporate banking is a key pillar for UBS. It enables us to secure our position as a leading universal bank and a reliable partner for the Swiss economy. The interest rate situation in Switzerland could perhaps delay our goal of achieving a cost/income ratio of 50% by the end of 2026, transiting to a uniform platform. We expect to get further synergies, and we are investing in customer service to further drive our integrated offer, both in Switzerland and around the world. These measures should have a positive impact on profitability. And thus, we are confident of achieving our target of a cost-income ratio of around 48% by 2028.

In Asset Management, we have significantly improved operational profitability. In addition, we have largely completed integration in key areas. A clear strategic focus and a broad-based product range are driving growth in the areas of alternative investments, ETFs and index solutions. In Asset Management, the Unified Global Alternatives unit manages assets of USD 330 billion in alternative investments. This scale enables us to offer clients broad-based access to private markets and hedge funds. Through consistent cost management and platform improvements, Asset Management aims to achieve a net new money growth rate of around 3% over the cycle.

By 2028, the cost/income ratio is expected to be around 65%. In the Investment Bank, we continue to rely on our strong and efficient model. This complements our asset management business and strengthens collaboration with the group. And it also complements our business with corporates in Switzerland with a clear focus on our client needs.

Revenue in the Global Markets segment rose to a record level in 2025. We are expecting this division to continue to perform robustly. At the same time, Global Banking further expanded its market share across the board in Asia Pacific, EMEA, Switzerland and the Americas. We expect to double revenue in this division by the end of 2026 compared with 2022. For the Investment Bank as a whole, we are targeting a return on allocated equity of around 15% over the cycle.

Ladies and gentlemen, not only are we working to complete the integration and implement our short- and medium-term priorities, but we also want to prepare UBS for the coming decade. Technology and structural trends that are shaping the financial industry and set to support long-term growth shown in this chart, wealth building and growth in alternative investments and geopolitical uncertainties. We are investing -- we are well positioned to support our clients in this setting.

Technology and artificial intelligence play an important role in this context. This is why we are investing heavily in transformative programs in the field of AI. These programs will fundamentally reshape our processes, improve customer service and strengthen our operational resilience. For example, we're using agent-based AI to simplify and accelerate processes.

This applies, for instance, to account openings or regulatory processes, including know your customer checks. In parallel, we are strengthening strategic partnerships with leading technology companies and universities. This includes the establishment of the Oxford UBS Center for Applied AI. as well as our collaboration with the Dalle Molle Institute for Artificial Intelligence of the University and the University of Applied Sciences in Lugano. The aim here is to translate cutting-edge research into practical solutions from which as many clients as possible ought to benefit.

We also recognize that digital assets and tokenization are presenting new opportunities. This has the potential of fundamentally changing the way we work. We are pursuing a focused client-centric approach. We are building key infrastructure and developing our offering in a targeted manner. All this is going to contribute to restore UBS' profitability to 2022 levels by 2028. That is before the acquisition of Credit Suisse.

As this chart shows, you too, dear shareholders, played your part in safeguarding financial stability in March 2023. This slide clearly shows that talking about a bargain or the deal of the century is entirely inappropriate in the context of the Credit Suisse rescue.

Ladies and gentlemen, I shall not repeat the very important comments made by the Chairman of our Board on regulation. Suffice it to say, 3 years ago, Switzerland faced one of the most difficult moments in modern financial history. It acted decisively and responsibly. This ensured stability and prosperity. Thanks also to the contribution made by UBS.

Now Switzerland faces a crucial phase in shaping the regulatory framework for the future. The question is not whether we will strengthen financial stability, but how we're going to do it. Lasting stability requires regulation that is targeted, proportionate and internationally aligned. We do not need fearmongering. And certainly, we do not need measures that may have a reassuring effect in the short term, but weaken stability and competitiveness in the long run.

The upcoming parliamentary process will be crucial. Consultation has triggered a great many reactions. In the process, a clear majority of people have questioned the calibration and international consistency of some of the proposals. It is to be hoped that these signals will be fully reflected in the democratic process. It is in our conscious interest that the financial center remains strong and internationally competitive. Finding the right balance will be decisive.

Esteemed shareholders, in conclusion, I would like to thank our Board of Directors for excellent partnership and cooperation. In particular, I would like to thank our Chairman, Colm Kelleher. My thanks also go to Lukas Gahwiler, who is not standing for reelection as Vice Chairman. I would like to thank him for his extraordinary commitment to UBS over many years. But Lukas, I would also like to thank you for the trust and cooperation with me personally.

I would also like to thank our clients for their continued trust. And I thank my colleagues on the Group Executive Board and our employees. They have shown extraordinary dedication and professionalism in yet another challenging year. Finally, I would like to thank you, dear shareholders, for your continued support and trust.

I would like to get back to what the Chairman of the Board of Directors and I promised on the 12th of June 2023 upon completion of the acquisition. And I quote, "we're focusing on our clients, private individuals, entrepreneurs and companies and helping them to protect and grow their wealth and achieve their goals. Together, our strengths and capabilities will be even more effective. We will make decisions based on facts, taking all aspects into account. We remain committed to our strong UBS corporate culture, our conservative approach to risk and our high standards of service, and we will not compromise on any of these".

This promise has guided our actions on every -- in every step along the way. It remains our guiding principle as we are making UBS even stronger, even more resilient and even better positioned for the future. Thank you, [Foreign Language]

Thank you, Sergio. I ask Michael Schoch to report the attendance.

[Interpreted] The verification of admissions tickets has yielded the following results. We have 1,136 shareholders and independent proxies present. We have a representation of 1,881,665,285 voting shares represented. That equals 77.64% of all shares that entitle the owner to vote with a nominal value of $0.10 each. And I announce the following according to Article 689F Paragraph 2 of the Swiss Code of Obligations, the independent proxy holds 1,872,709,511 votes and the shareholders present in the room, 8,955,774 votes. Attendance is being recorded in real time.

Before we start with the discussion of the individual agenda items, I would like to inform you on behalf of Dr. Marolda, the independent proxy that she informed the Board of Directors last Monday in aggregated form about the voting instructions received. I can now move on to the individual agenda items. I will present the first 3 agenda items consecutively.

Once all 3 items have been introduced, I will open the door for discussion on these agenda items. Thereafter, we will vote on all 3 items together in one voting process. I start with agenda Item 1, the approval of the UBS Group AG management report and consolidated and stand-alone financial statements for the 2025 financial year.

As usual, the detailed annual report for 2025 is available on our website. The reports of the statutory auditors, Ernst & Young Limited for the 2025 financial year are included in the financial information and do not contain any reservations. I continue with Item 2, the advisory vote on the UBS Group AG compensation report for 2025.

Dear shareholders, compensation continues to be a subject of high public interest and your feedback on this topic remains very important to us. We are pleased that the comments we received in 2025 were overall positive. The feedback also recognized that our compensation philosophy continues to provide a strong alignment with shareholder interests. Our compensation framework remains consistent with prior years with clear commitments to fair and consistent pay practices embedded in our policies.

Pay equity and equal opportunity are fundamental to support our strategy. We pay for performance, and we take pay equity seriously. As last year, I will provide further comments on the compensation topics ahead of the respective agenda items, but again, want to address upfront the topic of CEO compensation. When the Board determines the compensation of the Group Chief Executive Officer, it consistently considers the financial performance as well as the achievements against nonfinancial objectives and behaviors.

For 2025, Sergio Ermotti's compensation is in line with last year and reflects the strong financial results and the great progress on one of the most complex integrations in banking history. In addition, he successfully positioned UBS to develop further sustainable long-term growth and efficiency gains. The fact that 80% of his variable compensation is deferred for up to 5 years further demonstrates that our compensation framework provides strong alignment with shareholder interests and appropriately links compensation to longer-term sustainable performance.

Please let me emphasize that Sergio Ermotti's overall compensation remained unchanged compared to last year despite the excellent financial performance, the strong progress on the integration and the achievement of 100% of his goals. I continue with agenda Item 3, the advisory vote on the UBS Group AG Sustainability Report for 2025.

Dear shareholders, in 2025, we made further progress in advancing our sustainability and culture agenda. We have done so based on our commitment to further evolving UBS' culture as well as our continued ambition to position UBS as a leader in sustainability. Our progress is reflected in key environmental, social and governance, ESG ratings with MSCI reaffirming our AA score and continued strong performance in the S&P Global Corporate Sustainability Assessment. We are proud of the very practical and tangible results achieved as is evidenced by selected facts and figures, which are displayed behind me.

We continue to support our clients as they transition to a low-carbon economy, assessing climate-related risks and opportunities across our businesses to create value for clients, shareholders and other stakeholders. We continue to advance key components of our climate action plan, achieving reductions in our direct and indirect net greenhouse gas emissions and lowering our overall energy consumption.

We also remain committed to our lending sector decarbonization targets to address our financed emissions in specified sectors and have progressed on these. The say on nonfinancial reporting brochure, which is published on our website, provides you with a summary of nonfinancial aspects, including environmental matters, social concerns, employee-related issues, the respect for human rights and anticorruption measures. More information can be found in the UBS Group AG Sustainability Report 2025, which can also be accessed online on our website.

Dear shareholders, I now open the discussion on the agenda items 1, 2 and 3. I kindly ask speakers to limit their remarks to a maximum of 3 minutes. Time displays are installed to keep you an eye on your speaking time. I will be watching that time display myself. The first speaker is Mr. [indiscernible] and then I would like to ask Mr. Vincent Kaufmann and Ms. Katrin Landolt to get ready to follow on with their questions.

[Interpreted] Good morning, everyone. Esteemed Chairman of the Board, members of the Board -- of the Executive Board, ladies and gentlemen, esteemed employees of UBS. A few weeks ago, UBS successfully completed the transfer of Credit Suisse clients in Switzerland. An extraordinary milestone and exceptional achievement.

This success was by no means a given. It is the result of tireless work carried out with the utmost professionalism and an impressive team spirit. During this period, UBS employees not only managed the integration, but also continue to run day-to-day business at the highest level of quality. For this, they deserve our sincere thanks and deep respect. We must not forget that behind every success, there are also people.

The integration has been a major challenge for many employees, professionally, emotionally and personally. Changes in the organization in tasks and in requirements bring a variety of challenges. Change can also lead to job reductions. And that is painful for those affected. Nevertheless, UBS strong social plan in Switzerland helps to guide these processes in a responsible and socially compatible way.

This past year, the company also chose to fill a large number of vacancies with internal employees, which is a clear commitment by the bank to continue to rely on the skills and dedication of its own staff. This is an important signal of appreciation and speaks to the high level of competence and skills amongst our employees. For the excellent collaboration during the integration process, I would like to thank the UBS HR team and our external social partners, the Swiss Bank Employees Association, the Swiss Association of Commercial Employees and the Swiss Bank Employers Association.

Ladies and gentlemen, we are living in a time of great change, geopolitical uncertainties, economic tensions and new technologies are shaping our daily lives and environment. The public debate on regulation shows how important reliable rules are and the challenge is to find the right balance. Regulation that draws the right lessons from the past without overshooting the mark and negatively impacting Switzerland's financial sector. including Switzerland, also Switzerland in general as a place of work.

Switzerland has derived part of its prosperity from the value created by its banks. And at the same time, the banks benefit from being based in Switzerland. It is, therefore, all the more important that UBS continues to offer sustainable, appealing jobs in Switzerland and remain a Swiss bank in the future.

With the rise of artificial intelligence, we're currently experiencing a technological development whose influence extends far beyond the world of work. It will profoundly change our lives, our society and our economy and also the way we work. Current AI models, for example, cannot develop independent thoughts or ideas.

For UBS employees, Technological progress means that artificial intelligence can take over certain tasks such as analyzing large data sets, taking minutes in meetings, or supporting us in our daily work, for example, when planning and also in many other areas. And artificial intelligence also works using algorithms based on data and assumptions. Its application can strongly influence decisions or behavior and even social norms.

The role of employees and management, therefore, remain crucial to interpret results, assess them professionally with the necessary expertise and take responsibility for decisions. This also changes requirements. Work is becoming more complex, and we need employees who can flexibly apply their expertise and experience to responsibly accompany this development.

To make sure that as many employees as possible can help shape this change, we need opportunities for further development and training. Only this way will colleagues be able to take on new roles that technological progress entails. In addition to lifelong learning, UBS University also offers programs to support this transformation. With their knowledge and skills, our employees will be crucial in successfully meeting the challenges of the future.

A strong UBS needs employees who feel secure, who see their future linked to the bank and who can deliver strong performance with true engagement. It is important and right that UBS promotes a healthy working environment and enables employees to achieve agreed targets within the planned working hours, a diverse and inclusive work culture is also an essential component. And Switzerland will continue to need a strong social plan to responsibly manage change processes.

Ladies and gentlemen, together with the employer, we bear great responsibility for employees in Switzerland. This is what we stand for as the personnel representation of UBS, banking is people. A huge thank you to all UBS employees. And in closing, ladies and gentlemen, I'd like to also extend my heartfelt thanks to Lukas Gahwiler for his excellent collaboration. I have always greatly appreciated the dialogue with you in the external social partnership and also as the President of the Swiss Bankers -- Swiss Bank Employers Association, you have made a lot of progress, you've done a lot and have had a real impact for employees. Thank you so much.

Thank you very much, Don. Thank you for the ongoing good collaboration and partnership and the things you point out, and we clearly look forward to continuing to engage with you on these important topics. Now we have Mr. Vincent Kaufmann.

Dear Mr. Chairman, dear members of the Board, dear shareholders. I'm speaking on behalf of the Ethos Foundation and its more than 250 members, mainly Swiss pension fund that collectively manage around $400 billion. As long-term shareholders, we have a direct interest in seeing UBS manage sustainably, both environmentally and financially.

I would like to address 3 topics today. First, the bank's sustainability ambition remains insufficient. We acknowledge UBS climate targets and the 83% reduction in finance emissions from fossil fuel since 2021, but we want to look at the full picture. Sustainable investments account for just 5.8% of the total assets under management, 5.8%. That's simply not enough for the world's largest wealth manager.

At the same time, gross lending exposure to fossil fuel still amount to over $9 billion across the full value chain. Moreover, the lending portfolio decarbonization targets do not even cover half of the total credit exposure.

I'm happy that our Chair mentioned that the bank is willing to finance the energy transition. On the lending side, there is a simple metric to measure a bank's contribution to financing the energy transition.

This is the energy supply financing ratio. The green financing is divided by fossil financing. If the result is above 1, the bank finance more renewables than fossil. If it's below 1, then the bank does the opposite. Leading European bank already published this key figure and exceeds the threshold of 1. UBS does not publish this ratio. So we ask UBS to consider publishing this ratio in the next reporting that would help us to assess the real ambition of UBS in financing the climate transition.

Secondly, executive pay remains excessive and inadequately calibrated. UBS ranks at the very top of compensation among major banks in Europe. The CEO is among the highest paid bank executives in Europe, and we do not dispute the principle of paying for performance, but the current system has 2 structural shortfalls. First, the long-term incentive plan is valued at only 50% of the share price. This results in a leverage effect that is yet not reflected in the maximum variable compensation cap that we will vote on today and not published and not included in the maximum cap mentioned in the remuneration report. So the maximum variable pay can be much higher than what is mentioned in the report.

Secondly, the performance criteria remain very heavily tied to the return on tangible equity. This is fine, but this creates an incentive for the management to keep the core capital as low as possible in order to inflate profitability. This cannot be considered as an incentive for performance, but rather than for risk taking. We call on the Board of Directors to set a lower cap on variable compensation that fully integrates the leverage effect.

We also expect the Board to prevent potential remuneration excess, in particular, to avoid political measures that could prove to be much more restrictive. And third, the capital strength. We heard this is a very important topic for UBS and for us shareholders. UBS is now the only global systematic bank in Switzerland. This scale carries responsibility that extends to the entire Swiss economy. We are concerned that the share buybacks and high bonuses are coming at the expense of a solid capital base.

The Federal Council has rightly proposed stricter capital requirements. We support this approach. Today's proposal to cancel the shares bought back last year strike us as illogical since a part of the reform of the capital requirement will be published most likely in a few days. We must not allow a system where executives are rewarded while the risk is borne by the financial system and taxpayers.

This was one of the lessons of 2008. This was one of the lessons of the collapse of Credit Suisse. We shall not forget this lesson, especially since UBS new size would not longer allow a taxpayer bailout. UBS stands at a turning point. The question is not whether the bank is profitable, it is. The question is whether the bank remains sustainability profitable and profit must be not earn at the expense of financial stability in the future. We expect UPS to live up to this responsibility in the interest of all shareholders, long-term shareholders and of Switzerland. Thank you for your attention.

Thank you for those comments. If we talk about sustainability, and I expect further questions on sustainability, let me use this opportunity to emphasize some key points, respectively, to reemphasize some of the points that I made in my speech. We are guided by our ambition to be a leader in sustainability. The ambition and our progress have been confirmed by key environmental, social and governance ratings, MSCI and the S&P Global Corporate Sustainability Assessment.

In 2025, we further developed our climate transition plan and advanced its implementation. We fundamentally support clients as they transition to a low-carbon economy. And specifically, we made significant progress towards our Scope 1 and Scope 2 net zero targets. We reduced emissions by 48% cumulatively against the 2023 baseline and 20% year-on-year.

And we remain committed to our lending sector decarbonization targets in key sectors. We have, in fact, and acknowledged by you, made significant progress in our sector decarbonization journey with changes in absolute finance emissions associated with the UBS in scope lending for fossil fuels reduced by 83% against the 2030 target of 70%.

Lastly, to specific points you raised, let me highlight that our Asset Management had a combined invested assets value of $111.5 billion in net zero ambition portfolios, up from $64.4 billion the previous year. And with regard to the energy supply financing ratio, we explore metrics like these as part of our extensive internal review processes. However, given our business model, this particular metric has limited relevance at this time.

On executive pay, I fundamentally disagree with your comment on us being amongst the highest paid versus U.S. banks. With respect to the long-term incentive award, the initial share allocation of 50% of the maximum opportunity is not a shared price discount, but rather reflects the inherent risk of the instrument, including potentially losing 100% of the shares in line with market practice shareholders vote on the awarded amount, which reflects the accounting value and cost to shareholders.

Our compensation framework already materially reflects many of the best-in-class principles that support long-term sustainable performance with compensation delivered over 5 years. There is no scenario where we incentivize equity below our stated capital ratios. Our approach to compensation supports appropriate risk-taking and capital management.

Thank you. With that, can we have Ms. Landolt, please. And whilst we're waiting for Ms. Landolt, could Mr. Hendrik Schmidt, Ms. Natalia Ferrara and [indiscernible] get ready, please. Ms. Landolt, thank you.

[Foreign Language] Good morning, everyone. Standing in spotlight, which takes some courage. Before I tell you why I'm standing here, just a quick note. Let's talk about one of UBS most influential personalities, Colm Kelleher. You all know him, but not everyone here in this hall in Basel knows what truly sets him apart. I struck up a conversation with him at the memorial service shortly. It was about the project I had discussed several times with the deceased. As we parted Colm Kelleher shook my hand, and it struck me like a lightning because this man had the most delicate hands a man could possibly have.

Anyone with hands, like that has life under control and hopefully, our bank as well. We are all gathered here in Basel because we have the best interest of UBS at heart. However, UBS is once again in the crossfire of the U.S. Senate. This also has something to do with the acquisition of Credit Suisse. Ladies and gentlemen, with the integration of Credit Suisse, U.S. is now the successor bank to all of Switzerland's former major banks, namely the [Foreign Language]

Now I'm coming to point Jewish refugees fleeing nation brought not only their money to Switzerland, but also their personal belongings, such as valuable items like jewelry and had these stored in Switzerland in the hope of retrieving them later. Safes were rented for some of these possessions. But according to information from insiders, banks and other institutions also set up storage facilities for these personal belongings at the time, so-called consignment warehouses. And some of these may still exist today.

To facilitate the restitution of looted cultural property, the Looted Cultural Property Act was enacted after World War II. However, even at that time, the Swiss Bankers Association objected arguing that individual banks should not be burdened, thus conducting their own investigations into the contents of safes and deposit boxes, but should instead wait for specific inquiries or lawsuits from abroad. Unfortunately, it must be assumed that the same procedure was followed with regards to unclaimed personal belongings.

In any case, they are not mentioned in the final report of the Independent Commission of Experts on Switzerland and the Second World War, the Bergier Commission. Just as the affected individuals and eye witnesses are disappearing. So is the knowledge of the events of that time. And it is imperative to shed light on this matter. Hence, my question to the Board of Directors, are you prepared to make some effort to investigate the events of that time.

UBS expects trust from its stakeholders. However, it can only earn that through transparency and by addressing not concealing past burdens. This is part of a fresh start for UBS in the spirit of good governance. The public has a right to know what happened to those personal belongings and if any items still exist. They belong in Jewish museum and must not disappear without the trace and some of the objects should be displayed in a global exhibition as a sobering reminder of the past. I'm not the only one who thinks like this. It has something to do with respect, and all I desire is an exhibition with some of the ownerless objects. And this is all my heart.

I ask you not to hesitate any longer. It's time. I'm asking for that now for the third time at the AGM. It's now the third time I'm backing for this exhibition. Late of CS employees and the former CEO have lately broken their vow of silence regarding the ownerless objects, UBS now faces a truly unique dilemma. The bank cannot appropriate or dispose of these items because it is not their owner. Wars do not end when the last bullet leaves the barrel of a gun. The suffering that follows hunts generation and weighs heavily.

The denial and concealment that have gone on for so long are simply unbearable for me at least and also for those employees who know about it. I have already faced many adversities in this matter. You can believe me. But giving up was never an option. I ask you Colm Kelleher, Sergio Ermotti and the members of the Board of Directors to show goodwill towards my cause, which would win the hearts of people worldwide for UBS. [Interpreted] Could you please hand this to Colm Kelleher? Thank you.

Colm, I would gladly shake your hand again at any time, and thank you for your attention.

Thank you very much for those comments. Clearly, we take the whole issue incredibly seriously and have shown nothing but goodwill and sincere diligence in our assumption of the Credit Suisse issues and the investigations we're doing. I would like to say that we have found lots of property. We're not there yet. We continue to investigate. The legal issues we've disclosed publicly, we did do a settlement at the end of the '90s.

And this latest court case in the States is something that we are defending ourselves from vigorously. But nevertheless, notwithstanding the legality, insofar as you have information that you can give us where we can help you pursue these issues, we would very much like to hear those and if necessary, do what we can. But thank you very much for your comments. Thank you. With that, Hendrik, are you here? Are you going to speak in English or German for me?

If you allow me, Mr. Chairman, Mr. Ermotti.

[Interpreted] Members of the Group Executive Board and the Board of Directors. Ladies and gentlemen, I represent DWS, one of the leading European asset managers, and I'm speaking for the first time at the AGM of UBS. Following a very successful year, Mr. Chairman, you mentioned the figures already. All core areas of UBS have contributed to the stability, and this is to remain so.

We as shareholders are happy to see that the litigation in France, a cross-border case has led to penalty and damages of USD 835 million, and it's complete -- it's an entirely lower outcome than we have expected, and it seems to be a sign of moving towards new horizons. One question on that. Any of the payments of the $835 million have they been covered by insurance to some extent?

Mr. Chairman, you mentioned the economic significance and the social significance of UBS to Switzerland. You clearly emphasized on that. And UBS does have a very solid capital base. Growth integration, capital repatriation can be funded. And furthermore, you impressively outlined the potential disadvantages UBS would suffer should the current debate on regulation go on or should the regulation come out like that. It's clear that regulators and supervisors have to learn their lessons from the past, and they have learned their lessons.

And from an investor point of view, it's understandable, but it remains crucial for regulation to be risk adequate to be internationally comparable and to be neutral in terms of competition, overregulation is a burden on the return on capital and weakens repatriation of capital. I clearly say that equity is not an end in itself.

The capital requirements now being debated are challenging the logic of, let me say, rescuing Credit Suisse by integrating it in UBS because for us, as shareholders, the takeover of Credit Suisse was certainly not obvious and only it was acceptable under reliable conditions. Now if these requirements are now made more strict, it will be disappointing to our shareholders. And we doubt the reliability of the statements made. It cannot be in the interest of Switzerland if the only remaining systemically relevant bank in Switzerland now would look into relocating. Too Big to Fail has to create stability and should not be a trap in terms of competition and location. So I think we consider it necessary that you as the Board of Directors contribute to the debate.

And against this background, we welcome the national banking charter, the UBS Controller of Currency for the UBS subsidiary in the U.S. and this goes to show how important competition is, and we cannot ignore that from the point of view of shareholders. On integration, you made extensive statements. I'll be brief. Maybe you could briefly state about the role of the accounts recently identified that are subject to a hearing in the U.S. Senate with regard to national socialist background and the possible implication they would have and what Mr. -- what role Mr. Ronner would be playing there or might have been playing there.

I would like to go along with the previous speakers who thanked you, Mr. Gahwiler. For 4.5 decades, you've been a reliable and highly appreciated architect of the Swiss banking scene and your contribution to a successful integration of Credit Suisse and UBS is certainly not to be underestimated, but we were a little surprised when in October last year, it was announced that Mr. Ronner would be your successor today.

We have to be open in saying that, well, the Board of Directors communicated well and very much in advance so that we could adjust to that. Mr. Gahwiler, we wish you all the best for the future, the freedom you're going to have, and we're going to wish your successor best of luck in this mandate and the 2 candidates proposed today for election to the Board of Directors. We also wish all the best with Mr. Maestri, we have some doubts regarding the overboarding, and I would like to emphasize on that.

Ladies and gentlemen, UBS was successful in 2025, setting the course for further growth. It is now time to take the right decisions, weighing the pros and cons of the setting, and we would assume that you are going to apply discernment and transparency. We wish you all the best in doing that, and we will be happy to constructively support this process. Maybe I'll be coming back next year and would be happy to speak about the basis of new regulation, assessing the situation. I wish you best of luck. And I would also like to thank all the employees of UBS around the world who made a considerable contribution to this success. Thank you very much.

Henrik, I probably need an hour to answer all those questions, but I will try and summarize the answers because some I've already addressed. On the cross-border French matter, we had fully provisioned, there were no insurance was paid in this, and we settled below what we thought we would do at the time.

On capital strength, regulation and international competitiveness, I think I'd be very clear in my thoughts in my speech. And I'm more than happy to talk to you on an individual basis, as you know, I will to go through that in more level. At what capital level would you have to structurally reduce capital returns is your question. That will all depend upon what the Too Big to Fail rules are, and we will react accordingly when we have clarity on that.

And clearly, that also applies to the share buyback when we have clarity on the -- where we end up with capital under the Swiss regime, we will have further clarification to give you and so on. We do mean -- we do, however, think that the Federal Council's proposals as we've been very clear on, are extreme and unfortunately, unacceptable in their current form for us.

In terms of structure risk management, all these changes you want to know about, let us wait and see what the resolution is. Again, I'm sorry, when we have clarity, we'll be able to be much more definite about that. I don't think the national bank charter in the U.S. was a strategic objective in itself. It was a continuation of the growth of our wealth management business in the U.S. We were the only large bank that did not have a national bank charter. We had an ILC for those of you who are interested in such things, and that conversion is very important for us to support and develop our wealth management activities and provision of banking services to our wealth management clients in the U.S.

On the -- I think we've spoken at length about the Credit Suisse investigation. There was a Senate hearing. You've heard our response to that. We take this very seriously. We are dealing with this. We do not think we have any financial provisions there. But clearly, I take the moral obligation to make sure that we discover as much as we can very seriously.

Lukas, you're not standing for reelection. Lukas has spent 45 years, give or take, with this institution and deserves to do something else. I personally, as I made it very clear, we'll miss him, but I think we are very lucky to have a very strong candidate as Vice Chairman and Markus Ronner, who I have total faith as the whole Board does, and by the way, as do our shareholders. And succession planning, we've been very clear about that going forward, and we will add to that as we can.

In terms of Board involvement, we make sure that all our directors have sufficient time and resources to serve in the interest of UBS shareholders. So again, Henrik, I'm sure there'll be follow-ups you want with me. We can arrange that separately. With that, can I move to Ms. Ferrara, please?

[Interpreted] Esteemed employees of the UBS and employees of the Financial Center of Switzerland, esteemed Chairman of the Board, members of the Board of Directors and the Executive Board. Dear shareholders, dear members of the media. My name is Natalia Ferrara. I am Vice President of the Swiss Bank Employees Association.

We have represented the approximately 120,000 employees in the Swiss banking sector for over 100 years. Bank employees are once again facing difficult times. The unemployment rate in the banking sector is incredibly high. So the same level as after the last financial crisis and during the COVID-19 pandemic, and it has risen disproportionately over the past 12 months.

The outlook for the job market in the banking sector is not promising. Nevertheless, the Federal Council is proposing tighter banking regulations without having examined the impact of these measures on employees and the job market.

For us, as a union, three things are crystal clear. For one, human capital versus equity capital. With over 32,000 employees today, UBS is the third largest private sector employer in the country. Attacks on the bank are for us, as association, also attacks on the employees and on jobs in Switzerland. And that is why we categorically rejects the Federal Council's current proposal on capital requirements. Second, risk minimization instead of overregulation.

Unnecessary laws, weaken necessary laws. As you knew that already in Bern, for now, well, people seem to have forgotten. Maybe because FINMA and the Federal Council share responsibility for the collapse of Credit Suisse. Instead of enforcing existing capital requirements, they granted Credit Suisse excessive exemptions, generous exemptions from the applicable rules. And we must not forget that is a mistake that was made. And unfortunately, up until today, no one has taken on that responsibility and taken ownership of that responsibility of that mistake at government level.

This is why we -- demand that we need to implement first what we already have. Then in terms of new rules, well, sure. They should be adequate, but also the authorities must be adequate applying these rules. Who will be able to consistently, coherently implement the new regulation once it comes into force? FINMA?

Third point, well, abroad, the situation abroad, everyone, not just people in this room are wondering, what's happening with UBS? How high is the probability that the headquarters will be moved abroad? How great is the risk of a takeover? Everyone is wondering. Some are playing with fire. Switzerland cannot afford to simply do without this last large globally active bank at that level. We don't want to speculate as association. I don't even want to think about different scenarios. We are working in favor of a strong Swiss bank. We are advocating for a strong Swiss bank in Switzerland, rooted in Switzerland, headquartered in Switzerland that can be active on a global scale. You're being very generous.

And if I may, just a quick final remark in Italian. Mr. Ermotti, I'm addressing you in my native language without beating around the bush. When you returned to the helm of UBS 3 years ago, everyone was wondering what I thought about, what I was thinking. And I replied that leaders are judged well, above all, by what they do, not by what they promise. Three years later, I can now say, without fear of contradiction, that this UBS, that UBS has so far fulfilled all the commitments it made during the integration.

To its employees, well, actually, that's something I cannot say about the Federal Council, to be honest. Well, we see that promises were not kept. Three years ago, as an association, we several times tried to bring attention to this matter with the Credit Suisse at government level in Bern. We did that several times. And we said, it wouldn't be just difficult, but impossible for that bank to survive, and they laughed at us. Three years later, I will not stand here and make the same mistake to not be very clear in what we state. To be very clear to say that is not okay, and we cannot do with that.

Guy Parmelin, Federal Council Member, we clearly said at Parliament that we keep fighting. And today, Mr. Ermotti, I'm asking you for a clear commitment, a very clear commitment to Switzerland because the home of this bank is Switzerland, and this country has made it possible for this bank to become this big. And the employees are the true legacy and the true assets of this bank, and it's important to not forget that. Thank you very much.

Before I respond, could I ask [ Mr. Gershwin ], [ Mr. Robert Hollenstein ], Mr. Noack to get ready, please.

Ms. Ferrara, clearly, I agree with an awful lot of what you say, and I want to thank you very much for your collaboration and partnership. We do agree that changes in regulation could have a negative implication for the workforce, but hopefully, we will work together through this and we will get the right solution. But thank you very much for your support. And yes, we very much want to give that commitment, but we have to be able to give that commitment, if that's clear, right?So with that, [ Mr. Nicolas Gershwin ] from [ Actares ], please. And [ Mr. Hollenstein ] and Mr. Noack will be getting ready. Thank you.

Mr. Chairman, ladies and gentlemen, my name is [ Nicolas Gershwin ], and I'm representing [ Actares ] at this Annual General Meeting. Actares is an association of individual shareholders committed to engaging in dialogue with companies to ensure they operate in a sustainable and responsible manner.

My question. AT1 bonds unlawful write-down. In October 2025, the Swiss Federal Administration Court ruled that FINMA write-down of CHF 16.5 billion of Credit Suisse AT1 bonds was unlawful. UBS and FINMA have both appealed, meaning the case now sits before the Federal Supreme Court. Meanwhile, bondholders from multiple jurisdiction, retail investors, pension funds, institutions are pursuing claims in ICSID and U.S. Court.

My question is threefold. First, UBS letter to shareholders states the write-down was lawful, yet the federal court has ruled the opposite. Is it not misleading for UBS to continue asserting legality to shareholders while abiding judicial process remain unresolved? Second, if the Federal Supreme Court upholds the administration court ruling, what is UBS' estimated financial exposure? And has the provision being set aside?

Third, and most importantly, thousands of retail investors lost their life savings on instruments they were told were protected by Swiss law. Does the Board feel any moral responsibility towards these people or only a legal one?

Withdraw from Key Climate Alliance. UBS has withdrawn from Key Climate Alliance in adjusted targets over time. UBS withdraw from the Net Zero Banking Alliance in August 2025, pushed back its net zero operational target by 10 years and dropped 20% asset management alignment commitment. What binding mechanism exists to ensure that current commitments will not simply be revised again in a few years?

Fossil fuel financing. UBS financed USD 53.2 billion in fossil fuels between 2021 and 2024 while simultaneously claiming climate leadership. You stated that finance emissions are 78% below your indicative trend lines, but this is measured against your own self-defined baseline. Which independent third-party body verifies these figures? And why should shareholders trust a metric UBS designed itself?

Legal and financial risk today regarding the Credit Suisse integration. Has legal issue with Archegos Capital collapse 2021, Mozambique Tuna Bonds Scandal and Greensill Capital affair already terminated? You describe them as substantially resolved, but resolved at what cost? Why does UBS deliver clearly quantifying the full economic and reputational impact of this failure for shareholders?

USD 511 million Credit Suisse tax evasion fine. UBS paid USD 511 million to settle Department of Justice allegation that Credit Suisse helped U.S. clients hide over $4 billion from tax authorities with misconducts running from 2014 to 2023. This was not ancient history. It was ongoing write up until UBS acquired the bank. What exactly did UBS due diligence uncover before the acquisition? And can you guarantee shareholders that no further legacy Credit Suisse skeletons remain that could result in additional billion-dollar settlements? Actares thanks you for your attention.

Well, thank you very much. Let's go through a few of these. The write-down of Credit Suisse's AT1 instruments was an integral part of the rescue transaction. It was done pre-UBS acquiring Credit Suisse, a decision made by FINMA, who were the arbiters of that. We believe the write-down is in accordance with the contractual terms of the AT1 instruments in the applicable law and that FINMA's decree was lawful. The PUK report concluded that Credit Suisse would have been insolvent and could not have opened for business on the 20th of March without that rescue package.

We and FINMA have appealed the Federal Administrative Court's decision, and the case is pending before the Federal Supreme Court. Everybody is entitled to a legal opinion until that final judgment. We do not comment on provisions for specific matters beyond what we have disclosed in our financial reports. We will not comment on individual situations. However, I would note the terms of the AT1 securities were very clearly set forth, including FINMA's ability to order a complete write-down of the instruments. UBS generally expects, by the way, that AT1 instruments are primarily targeted to institutional investors.

On the question with respect to the legal and financial risks of the Credit Suisse integration. Following the repurchase of over 90% of the Credit Suisse supply chain finance funds, UBS no longer has a material exposure to claims in the Greensill matter. Equally, we consider the Mozambique and Archegos matters to be substantially resolved. These matters were known to us at the time of the acquisition agreement and accounted for. It is -- in fact, this illustrates the risks of known but unquantifiable contingencies that UBS was required to quickly assess and accept as part of the rescue transaction as well as our significant efforts over the last 3 years to address these legacy issues and resolve them. In fact, to the Credit Suisse tax evasion matter, this was also known at the time of the acquisition agreement.

So away from that, on climate sustainability, all I will say to you is we've laid out on our leadership ambitions. We are being independently verified by independent assessors of our ratings in this business with high ratings. On the specific issue withdrawing from the Net Zero Banking Alliance, we withdrew from that banking alliance because we actually felt that our own metrics were of a higher quality than the Net Zero Banking Alliances metrics. We continue to be part of the Net Zero Asset Management Alliance. Thank you very much.

I'm sorry? Do forgive me. Ms. Ferrara, I apologize. You asked a question, and wanted Sergio to specifically answer that question. So apologies for that oversight, Sergio.

[Interpreted] Thank you very much for the recognition and praise. As the Chairman said already, it's not easy to make promises without knowing the facts, but you can be sure that we are going to work along the same lines in the interest of -- certainly of the employees, and we are going to do this at the same level, working for the employees just as much as for the clients and shareholders. Together with our Board of Directors and my colleagues on the Executive Board, we are going to fight until the last minute to make sure that decisions are making -- are made on the basis of facts, not on any attempts like what happened. Now you can always count on that. And you mentioned it yourself. One thing is clear. It cannot be that a few years from now, somebody tells us, why didn't we speak up clearly. We speak up very clearly, and we are also taking responsibility for what we're saying. Thank you very much

[ Mr. Hollenstein ], please.

[Interpreted] Ladies and gentlemen, esteemed members of the Board of Directors, dear Mr. Sergio Ermotti, if I may ask you, urge you to listen to me, I hope to do so in a reasonable manner. Maybe also keeping up with the motto of my high school German teacher. Gravity is the soul of wit. The reason I'm addressing you, Mr. Ermotti, is not only due to the current situation at UBS, it takes back several years actually.

It goes back to the year 2018. At the time, you were CEO of UBS and confidence and trust in the bank was not very high. You and UBS, you were harshly criticized and attacked from many different sides. In this delicate moment, you stood your ground with courage, with open eyes, and you demonstrated a remarkable and with an unforgettable commitment, forget to me and many other shareholders, I'm sure, commitment to UBS.

At the time, as a testament to your unwavering confidence in UBS' success, you publicly purchased a 4 million UBS shares. That was no small amount. It was a significant sum, given that the share price was around CHF 13 at that time. Because of that, I myself had also purchased UBS shares, of course, on a much smaller, more moderate, modest scale, obviously. And like me, many others also decided to buy. When I look at the share price today, I simply have to thank you. And I think, not only on my behalf, but also on behalf of many other shareholders, [Foreign Language], Senor Ermotti.

And today and especially over the past 2 to 3 years, you and UBS are once again facing criticism for many members of parliament, including members of the Swiss government for the Federal Council, female members as well, and that, despite the fact that you saved Switzerland from a banking crisis, despite the fact that you helped out the government, the Federal Council. After all, Credit Suisse could also have been bailed out by the State. And despite the fact that the integration of Credit Suisse into UBS was largely successful and socially acceptable.

Not just you and your salary are under criticism, but also UBS' legitimate interest in becoming a globally strong bank. You and your team are in an intense debate with our also competent Federal Council and Parliament regarding the amount of capital contributions, and I wish you all the best in that endeavor. And I'd like to thank you for your steadfastness. And of course, with your [indiscernible] charm, you will ultimately be able to find a compromise that is truly in Switzerland's best interest.

Mr. Ermotti, I'll conclude by saying that I can't help but express my heartfelt thanks for your efforts in 2018 and also for your current commitment to UBS. But I don't just want to thank you with words. No. My name is [ Robert Hollenstein ], which is why I fetched a few steins, which means stone literally in German. And coming from Baden, I brought these. These are called [Foreign Language] sign, which are a delicacy confectionery delicacy. And I hope you can enjoy this world-famous delicacy, maybe with a fine espresso in Lugano or over coffee with the Board of Directors. There are enough of these delicacies for everyone. Senior Ermotti, all the best to you and to UBS. And I'd like to thank all of you for your attention. Thank you.

Well, clearly, I agree with all your comments on Sergio Ermotti. Mr. Hollenstein. Thank you. Well, Mr. Noack get ready. And then we have Ms. Gsell, Ms. Chamket and Ms. Corcelius thereafter. Mr. Noack, thank you.

Group Executive Board, members of the Board of Directors, my name is Philipp Noack, and I work for Urgewald, a climate protection organization. The Sustainability Report 2025 of UBS is entitled, Thinking and Acting with the Long Term in Mind. Now what you think in UBS, we cannot see, but we see your actions. And these are a far cry from being sustainable. UBS is particularly proud of its home base, Switzerland, the country with a high reputation around the world and known for its unique mountains.

Today, I'd like to ask questions about a shocking project that clashes with your alleged goal of long-term thinking and Swiss connectedness to mountains. You finance Glencore to a great extent, the company that has shown for years that is not interested in protecting climate or protecting human rights. In Elk Valley in British Columbia, Glencore owns various coal mines, where coal is being extracted in a very harmful way. You call the process mountaintop removal. You're simply blasting away mountains. It's an internationally ostracized mining procedure that is excluded by most financial institutions, including UBS.

But not enough. Glencore even intends to open a new mine there. Simon Wiebe of Wildsight and environmental organizations says these mines on top removal mining practices permanently alter the topography, pollute air and water and degrade the quality of habitat for humans and wildlife such as Bighorn Sheep and Grizzly Bear. In the rivers in the region, there are fish with deformed skulls and spines. By mountaintop removal, selenium can enter the waters in harmful concentration. In 2025, selenium values were measured at thirtyfold, the local values allowed. The reason for the valley fills used in mountaintop removal -- -- the reason for this is the valley fills.

My questions are what methodology do you use to observe the goals and guidelines of climate risk policy framework? Do you have knowledge of Glencore's Elk Valley mountaintop removal procedure? And if yes, what knowledge do you have? How do you ensure that clients, employees and shareholders of UBS can rely on the client risk policy framework being complied with? We all in this room would be shocked if Swiss mountains were blasted away. This is a terrible form of mining that has to be terminated around the world. We call upon you to comply with your own guidelines and to terminate any form of business relationships with companies operating mountaintop removal mines. Thank you very much.

I cannot comment on specific transactions that I do not know about. We cannot and do not comment on any potential client relationships or transactions, but we do take accusations of bad behavior if they are specific to us very seriously, and I would urge you to engage with our people to give us more information on this.

What I would like to say is that we make it very clear in our sustainability report what our metrics are, what our clear objectives are and the measurements are. We do recognize the importance of an orderly transition to a low-carbon economy. And I believe that our strategy includes the application of clear standards and criteria. But I would urge you to speak to our people on specific issues such as this to see if there is any way UBS can help.

All right. Thank you. Ms. Gsell, please. I hope I'm pronouncing that rightly.

Hello, everyone. My name is Julia Gsell, and I'm here for the Climate Alliance Switzerland. But I will be asking a question on behalf of ShareAction. In ShareAction, latest benchmark assessing the environmental and social performance of major European banks, UBS ranked 25th, placing it last among the institutions assessed. UBS scored particularly weakly on its fossil fuel policies as the bank does not yet rule out finance for new oil and gas projects or projects involving high-risk extraction methods like fracking or ultra-deepwater oil and gas. This places the bank well behind a number of European peers who have also begun to rule out finance to certain companies engaged in oil and gas expansion.

ShareAction's research shows that banks with stronger fossil fuel policies tend to allocate a smaller share of their total assets to fossil fuels. And while sound risk management and client engagement practices matter, they are not enough on their own. Without clear red lines on financing fossil fuels, there is little to prevent a bank from increasing its exposure to sector in the future.

ShareAction's findings on UBS climate targets are equally concerning the bank ranks 23rd out of 25 European banks assessed, and its renewable-to-fossil-fuel financing ratio of 0.41 in 2024 was the third lowest amongst European peers. This means UBS is still financing far more fossil fuel than clean energy. At a time when the energy transition calls for a strategic reallocation of capital and failure to do so increases both reputational and long-term financial risk for the bank. Will UBS commit to concrete steps to strengthen its restrictions on fossil fuel by clients by ruling out direct financing of new oil and gas projects as well as new pipelines liquefaction facilities and regasification infrastructure?

Thank you for sharing your views. We do not, however, share your conclusions as your methodology differs from our other key ratings that recognize UBS' progress in sustainability. And your approach also does not reflect our business model. We continue to progress against an ambitious climate road map, including our lending sector targets including fossil fuels. And we regularly review our policies to ensure that they reflect evolving expectations, but we do want to continue hearing from you and value the ongoing dialogue. We clearly believe we are a leader in this field and are outperforming others in an orderly transition.

So with that, can I ask for Ms. Chamket, please?

[Foreign Language] Good morning, Board members and shareholders. My name is Kim. I come from South Thailand. I am here to lift concern about the impact of UBS investment in a major Thai energy company. I have been affected by one of its projects called Biolapas gas power plant since I was 10 years old. I have been living with this issue I speak out for 18 years. In my community, we are concerned about land use, water impact, and not being meaningfully included in decision that affect our lives. This is what that my community depends on. It's already contaminated with visible stain. We are widely project like this, it will make it work. This community -- this company is also involved in project in the Mekong [indiscernible], which may affect work officially and the livelihood of millions of people.

In Thailand, people who speak out about this company can face little and made it harder for community to let concerns. Before I return home, I would like to ask for your support. Will you be able to make sure, this investment do not harm community? And how will you listen to and engage with average people like us?

Well, Ms. Chamket, thank you very much for coming all the way to Switzerland and for sharing your personal experiences with us. We appreciate you taking the time to raise your concerns. We do not, as I said, comment on specific client interactions or relationships, but we would like to learn more from you as you brief us a way from this. We do have reportable positions in a large number of companies worldwide in which it does not have any strategic interest, and we hold these positions on behalf of clients. So that's sometimes the confusion. I understand that you have a meeting with our experts tomorrow. So let's try and dig deeper into this and see if we can progress to some satisfaction for you.

I'd like now to call Ms. Janette Corcelius. And then if Mr. Martin Lutz, who is our last questionnaire here, would get ready. So Ms. Corcelius.

Greetings. My name is Janette Zahia Corcelius. I live in St. Paul, Minnesota, United States of America and work in Minneapolis, Minnesota. I am here with support from the Minneapolis City Council who passed the resolution urging UBS to divest from ICE Contractors, Palantir, GeoGroup, CoreCivic and CACI International.

I am here to give my testimony about living through Operation Metro Surge, which started on December 1, 2025, where 3,000 ICE, CBP and DHS Federal agents occupied the Seven County Metro, wreaking havoc and terrorizing our neighbors. 500 agents remain and are in the less resourced rural areas. Before the surge, there were 150 agents. 3,700 people have been arrested in Minnesota with 74% of them having no criminal record. Agents went after immigrants, undocumented and citizens, as well as indigenous, African descendants of slavery, white people and visibly transgender people.

The Federal Whipple Building is the detention center located at a Fort Snelling, which was first created as a concentration camp to hold the Dakota peoples on their sacred land in the place of their origin story. During the surge, two allies were murdered: Alex Pretti and Renee Nicole Good in South Minneapolis; and Julio Sosa-Celis, a Venezuelan immigrant was shot in the leg in North Minneapolis.

The same day, Good was murdered on January 7, ICE tear-gassed Roosevelt High School students and staff, kneeling and choking on Quentin Williams, an educational assistant who was abducted and detained. The same night Sosa-Celis was shot in the leg on January 14, ICE deployed flash bangs and chemical irritants underneath the van of the Jackson family of 7. Their infant almost suffocated to death. Alex Pretti was murdered 1 day after the historic January 23 general strike.

In the aftermath, we are left to deal with the implications of the surge. Impacted community members lost their jobs due to sheltering in place and facing eviction. Small businesses are filing for bankruptcy and closing. Public schools across the state are faced with closures and positions are being cut. Our level 1 trauma center is also facing closure. This isn't about immigration. It's about fear, retaliation and ethnic cleansing.

Trump and the far right social media influencers concocted stories about so-called Somali fraud. The retaliation comes from the George Floyd uprising that occurred during Trump's first term to fight police brutality and anti-black racism. The Swiss government through the OECD national contact point process has called on UBS to take action regarding its links to companies such as Palantir, CoreCivic, GEO Group and CACI International, which are involved in U.S. immigration detention and enforcement with follow-up expected by the end of April.

Could UBS provide an update on any actions taken or planned in response? I look forward to divestment from this horrific incident we have gone through in Minnesota and that our communities across the United States are still facing.

Well, thank you for coming here and sharing your experiences, we have an awful lot of sympathy as individuals. UBS is committed to respecting and promoting human rights throughout our businesses. It is at the core of our values. However, as I said earlier, we will not specifically comment on any potential client relations or transactions, and I would remind you that a lot of our reportable positions in a large number of companies worldwide, we hold on behalf of our clients, not as principals, but we are listening to your concerns, and I would reemphasize that UBS is committed to respecting and promoting human rights throughout our businesses.

And with that, can we go to Mr. Martin Lutz, please?

[Interpreted] Martin Lutz, Export Manager from [indiscernible]. Mr. Chairman, members of the Board, CEO and Group Executive Board, dear shareholders and guests, I would like to say a few words about the U.S. dollar. When decades ago I ordered brochures on adventure stores with [indiscernible] , the dollar was worth CHF 4.50, I repeat, CHF 4.50. At that time, someone said, how much time will it take for the dollar to be CHF 1? And everyone said, that's excluded, it will never be the case. It's outrageous to think that this would never be possible.

And now all of us know where we're standing with the dollar. Let me refer to the BRICS' state, an association founded around 2010, in opposition more or less to G7 and the U.S. dollar in the U.S. Brazil, Russia, India, China, Singapore and Egypt, Argentina, Saudi Arabia, and recently, Indonesia have joined the group. And with the Iran war now, the Gulf states are likely -- including Iran, are likely to join them.

Now my question is, what's UBS' Plan B? Because it's very likely that the dollar is not going to go up but going to go down. And if, for instance, China, a few years from now will surpass the United States of America as the biggest economic power, the dollar will not be the global #1 as a currency. And that will mean huge problems for the horrendous state debt of the U.S. The Fed cannot keep on printing money.

And I have another question. It's very gratifying to see that business is doing so well at UBS and the dividend is rising and rising, albeit not in the desired currency. And as Mr. Ermotti said, the main problems and litigations of Credit Suisse legacy have been substantially resolved. The takeover of Credit Suisse happened on the basis of an extremely unfair ratio of about 10% of the corporate value. And now that we have come a long way and Credit Suisse has been integrated well. I would like to know when a fair offer of, say, 60% to 70% of the Credit Suisse value will be made to former Credit Suisse shareholders?

I think it's a ripoff and unfair offer that was made. And I would not want for UBS to be considered a bank that goes down in history as a bank that rips off and is unfair.

It was clear rip off. And now it's the time to solve this problem to give fair -- to offer a fair resolution to the ex-Credit Suisse shareholders. Thank you for your attention.

Thank you for this question on the dollar. The U.S. dollar is clearly subject to volatility. Our choice to use it as our functional presentation dividend and share capital currency is deliberate. The decision accurately reflects the economic substance of our business and fully aligns with accounting and regulatory requirements. We do actively manage currency risk and have a clear strategy in place should U.S. dollar weakness persist, U.S. dollar volatility is not a passive risk for us. It is closely monitored, actively managed and incorporated into our capital allocation decisions. Our top priority remains preserving real economic value and ensuring sustainable shareholder returns.

On the issue of restitution to Credit Suisse shareholders, I, with respect, have absolutely no comment.

So with that, we have no more questions, and I conclude these questions are open. And we'll move on with the rest of the -- so I will close the agenda items in 1, 2 and 3. I ask Michael Schock to briefly explain our voting device before we proceed with the first electronic vote. Michael?

[Interpreted] Dear shareholders, as soon as a new vote is opened, the screen will switch on automatically. The touch screen will dim automatically after 3 minutes, and then switch off completely. You can switch the device back on at any time, touching the touchscreen or pressing the red button on the side.

Under the language icon, you can change the language. Under the [indiscernible] icon, you can check how you have voted on the individual agenda items. And under the info icon, you can view your own personal shareholder information and see how many votes you represent.

Shortly before a vote, the relevant agenda item will appear on your voting device. If you touch the green area on the screen, you are voting yes. With the red one, you're voting no. And with the amber area, you are abstaining from the vote. As soon as you have made a choice, this is confirmed by vibration of the voting device. The selected area is marked by a tick, and the unselected areas are dimmed. Should you press the wrong button by mistake, you can correct your vote within the voting period by selecting a different button -- directly selecting a different button.

Once the voting period has ended, it's no longer possible to correct your vote. Once the voting period has ended, the screen will display the choice you have made.

So I will now proceed to the votes on the agenda items 1, 2 and 3. I will read each of the agenda items.

Item #1. The Board of Directors proposes that the management report for the 2025 financial year and UBS Group AG consolidated and stand-alone financial statements for the 2025 financial year be approved.

Agenda item #2. The Board of Directors proposes that the UBS Group AG Compensation Report 2025 be ratified in an advisory vote.

And agenda item #3. The Board of Directors proposes that the UBS Group AG Sustainability Report 2025 be ratified in an advisory vote.

[Interpreted] The vote on items 1, 2, 3 is herewith open. We will conduct a single round of voting. The 12 seconds voting period begins now.

[Voting]

[Interpreted] Time's up. Bear with us for a few seconds until the results are shown on screen.

As you can see from the results on the screen, you have approved item 1 at 99.48% annual report. And 88.36% have approved the compensation report. 89.23% have approved the Sustainability Report 2025.

So the AGM has approved all 3 motions of the Board of Directors.

I continue with agenda item 4, the appropriation of total profit and distribution of ordinary dividend out of total profit and capital contribution reserve. The business performance of 2025 is explained in detail in our annual report, and the CEO has summarized the key points in his address.

The proposed appropriation of profits is outlined in the invitation of the AGM. Accordingly, the Board of Directors proposes an ordinary cash dividend of $1.10 per share to be paid in equal parts from total profit and capital contribution reserve.

I have no questions for discussion on agenda item 4. So with that, I close the nonexistent discussion and proceed to the vote on agenda item 4. So the vote being the Board of Directors propose to allocate USD 11.232 billion of the total profit of UBS Group AG for 2025 of USD 13.07 billion to the voluntary earnings reserve. The Board of Directors proposes in addition the distribution of an ordinary dividend of $1.10 in cash per share of USD 0.10 nominal value to be distributed equally for total profit and capital contribution reserve.

[Interpreted] I hereby open the votes. The 10-second voting period begins now.

[Voting]

[Interpreted] The result will be displayed shortly on the screen behind me.

As you can see from the results displayed, 99.86% of the voting shares voted in favor of the appropriation of profits, and the ordinary dividend distribution in equal parts from the total profit, and the capital contribution reserve.

The AGM approves the motion of the Board of Directors.

We proceed to agenda item 5, the discharge of the members of the Board of Directors and the Group Executive Board for the 2025 financial year. The Board of Directors proposes that discharge be granted to the members of the Board of Directors and the Group Executive Board for the 2025 financial year. The names of the individuals who served on the Board of Directors of the Group Executive Board of UBS Group AG during the 2025 financial year and discharges therefore subject to today's vote are now displayed.

There are no questions to go on agenda item 5. So with that, I will close the discussion and proceed to the vote on agenda item 5. The members of the Board of Directors and the Group Executive Board of UBS Group AG affected by this agenda item are excluded from participating in the voting. The motion is the Board of Directors proposes that discharge of the members of the Board of Directors and the Group Executive Board for the 2025 financial year be granted.

[Interpreted] Voting is now open, and the 10-second voting period begins immediately.

[Voting]

[Interpreted] The result will be displayed shortly on the screen behind me.

As you can see from the results displayed, 98.7% of the votes cast were in favor of the Board of Directors' motion.

The AGM has approved the motion of the Board of Directors. We proceed to agenda item 6, the reelections and elections of the members of the Board of Directors. As the members of the Board of Directors and as Chairman are elected individually for a term of office until the completion under the next Annual General Meeting, all members who make themselves available for a further term of office must be reelected.

I would like to thank all colleagues who stand for reelection. Before we get to the elections, I would like to say goodbye to 3 colleagues: Lukas Gahwiler was elected to the Board of Directors 4 years ago and is not standing for reelection today, as stated before. But now on behalf of the entire Board of Directors, I would like to thank him for his outstanding collaboration and unrelenting commitment to our firm. As Vice Chairman of UBS, he played a pivotal role in connection with the successful takeover of Credit Suisse. During his tenure on the Board of UBS, he was a member of the Risk Committee and the Governance and Nominating Committee.

William Dudley was elected to the Board of Directors 7 years ago and is not standing for reelection today. On behalf of the entire Board of Directors, I would like to thank him for his valuable collaboration and distinguished service to the firm. During his tenure on the Board of UBS, William was a member of the Corporate Culture and Responsibility Committee, the Risk Committee and the Governance and Nominating Committee.

Jeanette Wong was also reelected to the Board of Directors 7 years ago and is not standing for reelection today. On behalf of the entire Board of Directors, I would like to thank her for her esteemed collaboration and dedicated service for firm. During her tenure to the Board of UBS, Jeanette was a member of the Audit Committee, the Compensation Committee and the Corporate Culture and Responsible Committee.

I now briefly introduce all members of the Board of Directors who are standing for reelection. Detailed CVs and information on their mandates is listed and listed companies are available in the Corporate Governance section of our Annual Report 2025. After these introductions, I will then proceed directly to our agenda item 7, followed by a joint discussion on agenda Item 6 and 7.

Let me begin with agenda item 6.1. I will ask Lukas, our Vice Chairman, to conduct the procedure for my reelection as member of the Board of Directors and, at the same time, as Chairman of the Board of Directors.

[Interpreted] Dear shareholders, ladies and gentlemen, Colm Kelleher's term of office expires at today's Annual General Meeting. He is willing to stand for reelection to this office and to continue serving as Chairman of the Board of Directors. Colm was elected Chairman of the Board of Directors of UBS Group AG Limited 4 years ago. If reelected, he would continue to serve as Chairman of the Governance and Nominating Committee and the Corporate Culture and Responsibility Committee.

The Board of Directors is very pleased that Colm is willing to continue serving as Chairman of the Board. He has done an outstanding job over the past 4 years. We, therefore, recommend his reelection.

Agenda Item 6.2, the reelection of Jeremy Anderson. Jeremy was elected 8 years ago. After his reelection, he will remain Chairperson of the Audit Committee and member of the Government and Nominating Committee.

Agenda item 6.3, the reelection of Patrick Firmenich. Patrick was elected 5 years ago. After his reelection, he will remain a member of the Audit Committee and be newly appointed as a member of the Compensation Committee. His election of the Compensation Committee is scheduled under Agenda Item 7.3.

Agenda item 6.4, the reelection of Fred Hu. Fred was elected 8 years ago. After his reelection, he will remain a member of the Governance and Nominating Committee.

Agenda Item 6.5, the reelection of Mark Hughes. Mark was elected 6 years ago. After his reelection, he would remain Chairperson of the Risk Committee and a member of the Corporate Culture and Responsibility Committee.

Agenda Item 6.6, the reelection of Renata Jungo Brungger. Renata was elected 1 year ago. After her reelection, she would remain a member of the Corporate Culture Responsibility Committee and be newly appointed as a member of the Risk Committee.

Agenda Item 6.7, the reelection of Gail Kelly. Gail was elected 2 years ago. After her reelection, she would remain a member of the Governance and Nominating Committee and of the Compensation Committee. Her reelection of the Compensation Committee is scheduled under agenda item 7.2.

Agenda Item 6.8, the reelection of Julie Richardson. Julie was elected 9 years ago. After her reelection, she would remain Chairperson of the Compensation Committee and a member of the Risk Committee. Her reelection to the Compensation Committee is scheduled under agenda item 7.1.

Agenda item 6.9, the reelection of Lila Tretikov. Lila was elected 1 year ago. After her reelection, she will remain a member of the Audit Committee.

We finally proceed to the agenda item 6.10 to 6.12, the election of Agustin Carstens, Luca Maestri and Markus Ronner. The Board is pleased and proud to nominate Agustin Carstens, Luca Maestri, Markus Ronner as new members of the Board of Directors.

Agustin Carstens will bring very valuable experience as a world-renowned central banker, regulator and finance minister. He is an expert in current economic and regulatory developments. He was born in 1958 and is a Mexican citizen. The Board intends to appoint Agustin as a member of the Governance and Nominating Committee as well as the Corporate Culture and Responsibility Committee.

Luca Maestri will bring very seasoned experience as a CFO in leading global technology firms, coupled with extensive knowledge and strategic planning and value creation. He demonstrates many years of professional experience at the interface between finance and IT technology. He was born in 1963 and is both an Italian and an American citizen. The Board of Directors intends to appoint Luca as a member of the Audit Committee.

Markus Ronner, a former member of the Group Executive Board and Group Chief Compliance and Governance Officer, has dedicated his entire professional career to UBS since joining the company in 1981. Over the past 25 years, he has held various global leadership roles in business, control and audit functions. He has proven expertise in the areas of regulation, risk control and governance and is highly regarded by Swiss and international authorities. Markus was born in 1965 and is a Swiss citizen. The Board intends to appoint Markus as Vice Chairman, but he will not serve in any committee during his first year.

All 3 CVs are included in the invitation to the AGM on our website. I would now like to invite Agustin Carstens to briefly introduce himself. The floor is yours.

It is an honor to stand in front of all of you as I'm being considered for a UBS Global Group Board position. My first encounter with UBS was over 40 years ago in my very first job as foreign exchange trader, managing the international reserves of Banco de Mexico. Immediately, UBS impressed me by its professionalism, integrity, creativity, innovative spirit, commitment to the client and efficiency.

In the year since, I have had many additional contacts with UBS, and my initial impression has always been gratified and enhanced. I frequently thought to myself, UBS is an institution that, if the opportunity arises, I would feel proud to be part of.

Supporting my case is the fact that I bring to the table a unique and rich perspective about the main topics that are of concern for UBS, including management, decision-making, running large, complex and diverse institutions, economic and market analysis, financial regulation and supervision and digital financial innovation. I acquired this expertise, thanks to my long and broad career, which encompasses teams at the highest levels in the major central bank, being Minister of Finance and main regulator and supervisory in my country of origin and working at the top of 2 international financial institutions, namely the IMF and the BIS.

[Interpreted] One very positive side effect of my time at BIS was that it's allowed me and my family to live here in Basel for almost 8 years. The city has enabled us to deepen our appreciation for the people and culture of Switzerland. We have made some very good friends from whom we have also learned a great deal. Thomas Fiore, a good friend of mine, once told me that at one point in his life, he was a sergeant in the Swiss Army. One of the very useful lessons he learned there was the 3K leadership principles applied in the Army, which K stands for German, of course, but it's command, control and correct. What is special about these principles is that they create a dynamic leadership cycle and reflect a learning-driven culture.

Let me suggest that should I be elected, I would commit to ensuring that these principles continue to be followed by UBS, just as I'm sure they already are today. Thank you very much for your kind attention.

Thank you very much, Agustin. Can I now invite Luca Maestri to briefly introduce himself? Luca, the floor is yours.

Thank you, Chairman, for the very kind words of introduction, and good afternoon, everyone. I'm very honored to be nominated to this distinguished Board, and I take this consideration with great respect and a deep sense of responsibility.

Just a few words on my background. I was born and raised in Rome. And after moving across continents for many years, I now live with my wife, Katrina, and my 2 kids in sunny California. I also have a close association with Switzerland and with UBS. I have lived and worked in this wonderful country for almost a decade at different stages of my professional career. And for nearly 40 years, I've been a client of UBS, both personally and as CFO of large companies, I understand the critical role that the bank plays in Switzerland and around the world, and I have always admired and appreciated UBS for its disciplined leadership, its sound governance, its relentless pursuit of excellence and the steadfast commitment to its clients.

My role as a finance executive has taken me from Europe to Asia, Latin America and, most recently, to the United States across industries as diverse and challenging as automotive, infrastructure and technology. I've had the privilege of navigating financial operating complexity at scale in different cultural and economic context. That breadth of experience has shaped how I think about business, about risk and about value creation. I have developed a firm conviction, the finance and technology are no longer parallel tracks. They are converging very quickly. I have seen firsthand how thoughtfully applied technology transforms not only operational efficiency, but the quality of trust between an institution and its clients.

The best financial institutions, I believe, are not simply stewards of capital. They are also stewards of confidence, and that is particularly critical during the volatile times that we live in. The financial landscape is undergoing transformations of extraordinary speed and scale from digital innovation to evolving client expectations and a changing regulatory environment.

My commitment as a Board member is to contribute my experience in global markets and complex operating environments to the sustainability of the bank and the creation of value for its shareholders. I look forward to working alongside my fellow Board members, the executive team and all the talented people at UBS around the world towards the common goal of long-term success for this great institution.

Thank you very much, Luca. And finally, I would like to invite Markus Ronner so he can briefly introduce himself as well. Markus, the floor is yours.

[Interpreted] Ladies and gentlemen, dear shareholders, it is a great pleasure and honor for me to have the opportunity to briefly introduce myself to you today. Switzerland stands for reliability, precision and innovation and a sense of responsibility towards the community as well as towards future generations. These virtues and values have made our country strong, and I grew up with these values and virtues. These are also values and behaviors that are firmly anchored at UBS. Reliability, precision, innovation and responsibility are timeless, and they serve as cornerstones of trust in the bank, especially in uncertain times like these. Furthermore, we should always maintain a certain degree of humility.

Throughout my various roles at UBS, I have always been committed to ensuring that UBS embodies these Swiss strengths, and that UBS is perceived as a strong ambassador for Switzerland, and that Switzerland can be proud of it. I've spent entire my life at UBS, as Colm Kelleher mentioned. I started out as an apprentice, then made my way through all these different steps up to global leadership roles, and even a member of the Group Executive Board, I've also spent time abroad, got to know these structures and have realized how important it is to seize opportunities, to recognize risks, to be able to create resilient structures and, obviously, also consider regulatory developments in our strategy.

This often involves a dialogue with supervisory authorities worldwide, and I'd like to bring this knowledge to the Board of Directors. I am deeply grateful for what UBS has made possible for me. This is why it is an absolutely central concern of mine that UBS remains a reliable partner in the future for our clients, our employees, for Switzerland and its taxpayers, and of course, for you as the owners of our bank. I am looking forward to the tasks at hand. I will give it my all, and I'd like to thank you in advance for your trust.

And now I'll hand the floor back to our Chairman of the Board of Directors, Colm Kelleher.

Thank you very much, Markus. I now proceed to agenda item 7, the reelection and election of the members of the Compensation Committee. The Board of Directors proposes that Julie Richardson and Gail Kelly be reelected, and that Patrick Firmenich be elected as a member of the Compensation Committee for a term of office until the completion of the 2027 Annual General Meeting.

I would open the discussion on the election and reelection of directors, but there are no questions. So with that, I think we will close the discussion and proceed to the votes on the agenda item 6 and 7 and start with the agenda item 6.1 to 6.12.

So just to summarize those, the Board of Directors proposes that Colm Kelleher, Jeremy Anderson, Patrick Firmenich, Fred Hu, Mark Hughes, Renata Jungo Brungger, Gail Kelly, Julie Richardson and Lila Tretikov, each of whom term of office expires with the conclusion of the 2026 AGM, be reelected; and that Agustin Carstens, Luca Maestri and Markus Ronner be elected for a term of office until the completion of the 2027 AGM.

I will ask Michael again to explain the voting procedure.

[Interpreted] We would use the voting device to conduct all new and reelections the Board of Directors in a single voting round. The names of all Board members standing for election or reelection will now be displayed on the screen of your voting device.

The 12 Board members are spread across the total of 4 screen pages. You can use the arrow at the bottom right to scroll to the next page or the arrow at the bottom left to scroll to the previous page. These arrows will flash until you have cast your votes for all candidates on all screen pages. As there are a total of 12 individual votes, the voting window will remain open for 40 seconds.

The voting period begins now.

[Voting]

[Interpreted] The results will appear shortly on the screen behind me. As you can see from the results displayed, vast majorities have approved the Board's motions.

The AGM has confirmed all members of the Board of Directors standing for reelection, thank you, and me as Chairman and elected Agustin Carstens, Luca Maestri and Markus Ronner as new members of the Board of Directors. I congratulate all members on their election. I'm delighted that you'll continue to support the Board of Directors going forward.

Prior to this AGM, both the reelected and newly elected members did confirm to me that they would accept their appointments in the events of a positive vote. So congratulations, Board members.

I now proceed to the vote on agenda items 7.1 to 7.3. The Board of Directors proposes that Julie Richardson, Gail Kelly be reelected and Patrick Firmenich be elected for a term of office until the completion of the 2027 AGM as members of the Compensation Committee. At its constitutional meeting, the Board of Directors intends to reappoint Julie Richardson as Chairperson of the Compensation Committee.

[Interpreted] We shall also conduct this selection in a single round. The voting window for the 3 candidates standing for reelection or election will remain open for 12 seconds.

Voting time is on now.

[Voting]

[Interpreted] The results will appear on the screen in a minute. Bear with me.

As you can see from the results, vast majorities have approved the Board's motions.

The AGM has confirmed that Julie Richardson and Gail Kelly and elected Patrick Firmenich as members of the Compensation Committee. I congratulate all 3 members on their election. I'm pleased you will continue to support the Compensation Committee going forward. Prior to this AGM, the reelected and newly elected members of the Compensation Committee confirmed to me that they would accept their appointments in the event of a positive vote.

I now proceed to agenda item 8, the approval of compensation for the members of the Board of Directors and the Compensation Board. For the next 3 compensation votes, I refer to the Compensation Report 2025 of UBS Group AG and to the supplementary say-on-pay brochure available on our AGM website -- web page. Both documents provide detailed explanations of the total compensation amounts be voted on.

We will first present and discuss all 3 compensation proposals and subsequently vote on all 3 total compensations in one total voting process.

I begin with agenda item 8.1, the approval of the maximum aggregate amount of compensation for the members of the Board of Directors from the 2026 AGM to the 2027 AGM. Our overall approach for Board member compensation remains appropriate and, therefore, unchanged. The proposed maximum aggregate amount of compensation for the members of the Board of Directors for the period from the 2026 AGM to 2027 AGM also remains unchanged at CHF 15 million.

I continue with agenda item 8.2, the approval of the aggregate amount of variable compensation for the members of the Group Executive Board for the 2025 financial year. The proposed GEB performance award pool for 2025 is approximately CHF 118.9 million, an increase of 4% compared to the 2024 GEB pool. The 2025 pool reflects the outstanding performance of the GEB, including the Group CEO in the context of excellent overall group performance, significant process with the integration of Credit Suisse and the resolution of legacy litigation matters.

And I proceed to item agenda 8.3, the approval of the maximum aggregate amount of fixed compensation for the members of the Group Executive Board for the 2027 financial year. The proposed maximum aggregate amount of fixed compensation for the members of the Group Executive Board for 2027 is CHF 30 million. This is a reduction of CHF 2 million compared with the approved amount for 2026. The reduction is driven by changes in the GEB composition resulting in fewer GEB roles and represents an additional decrease following last year's reduction in the Group Executive Board fixed compensation budget.

There is no question here from anybody. So we will go straight to the votes on the agenda items 8.1 to 8.3. To remind you, proposal 8.1, the Board of Directors proposes that the maximum aggregate amount of compensation of CHF 15 million for the members of the Board of Directors of the period from the 2026 AGM to 2027 AGM be approved; 8.2, the Board of Directors proposed that the aggregate amount of variable compensation of CHF 118,887,500 for the members of the Group Executive Board for the 2025 financial year be approved; and item 8.3, the Board of Directors proposes that the maximum aggregate amount of fixed compensation of CHF 30 million for the members of the Group Executive Board for the 2027 financial year be approved.

[Interpreted] We're going to vote on these 3 items in a single round of voting. Voting is now open. Voting will be open for 12 seconds and is now opened.

[Voting]

[Interpreted] The results are going to be displayed on the screen behind me in a minute. As you can see from the results, you have a -- vast majorities approved the Board's proposals.

The AGM has approved the motions of the Board of Directors.

Agenda item 9, the reelections. We will start with the agenda item 9.1, the reelection of the independent proxy, ADB, Altorfer Duss & Beilstein AG, Zurich, for a 1-year term of office expiring after completion of the AGM in 2027. In accordance with the Article 15 of the Articles Association, the AGM elects the independent proxy. The Board of Directors proposes the reelection of ADB Altorfer Duss & Beilstein AG, Zurich as independent proxy for a further term of office until the completion of the next AGM.

ADB Altorfer Duss & Beilstein AG, Zurich has confirmed to the Board of Directors that it has the independence required to exercise its mandate.

Agenda item 9.2, the reelection of the auditors, Ernst & Young Ltd, Basel, for the 2026 financial year as auditors for the consolidated and stand-alone financial statements of UBS Group AG. With Ernst & Young, we have a professional and efficient partner who fully meets the high standards of a global financial institution. Our long-standing partnership offers the key advantage that Ernst & Young is deeply familiar with our company, structures, products and services, enabling them to perform their oversight role effectively.

Ernst & Young have confirmed the Audit Committee that it has the independence required to perform its mandate.

I have no questions on the discussion. So with that, I will go straight to the vote. Remind you, motion 9.1, the Board of Directors proposed that ADB Altorfer Duss & Beilstein AG, Zurich be reelected as the independent proxy for a 1-year term of office expiring after completion of the AGM 2027. And; and motion 9.2, the Board of Directors proposes that Ernst & Young Ltd, Basel be reelected for the 26th financial year as auditors for the consolidated and stand-alone financial statements of UBS Group AG.

[Interpreted] We will vote these 2 agenda items in a single voting round. As soon as the voting period opens, the 2 votes will be displayed on a single screen of your voting device. The voting window will remain open for 10 seconds.

Voting is now open and has begun.

[Voting]

[Interpreted] The result will be displayed shortly on the screen behind me.

Approved the two motions of the Board of Directors.

We still need to wait for results.

Sorry, I thought it was out.

[Interpreted] As you can see from the results displayed, 99.85% of votes have -- voted in favor of the reelection of the independent proxy and 85.03% have voted in favor of the reelection of the auditors.

As I said, the AGM has approved the 2 motions of the Board of Directors. I congratulate Altorfer Duss & Beilstein AG, Zurich and Ernst & Young on their reelection.

I continue with agenda item 10, the ordinary reduction of share capital by way of cancellation of shares repurchased under the 2024 share repurchase program. The 2024 share repurchase program was concluded on the 23rd of May 2025 with over 63 million shares repurchased at a total purchase price of nearly USD 2 billion. The average purchase price was USD 31.36 per share. The over 63 million shares are now proposed for cancellation along with the corresponding reduction of the share capital.

On the 4th of February 2026, the call to creditors was published in the Swiss Official Gazette of Commerce. As no creditors have come forward, Ernst & Young Limited as auditors have prepared a special audit report confirming that all claims of UBS Group AG's creditors remain fully covered despite the capital reduction.

I opened the discussion on the agenda item. There are no speakers again at this time. So with that, we will go straight to the vote on agenda item 10, which is that the Board of Directors proposes that UBS Group AG share capital be reduced by USD 6,377,655 from USD 334,158,171.4 to USD 327,780,516.14 by canceling 63,776,550 registered shares with nominal values of USD 0.1 each, all of which are held in treasury and the reduction amount be booked against the minus position for treasury shares.

[Interpreted] I hereby open this last vote. The 10-second voting period begins now.

[Voting]

[Interpreted] The results will be displayed shortly on the screen behind me. As you can see from the results displayed, 94.39% of voting shares voted in favor of the Board of Directors' motion.

The AGM has approved the motion of the Board of Directors. I ask the Notary, Ms. Dobry Oesch, to kindly certify the results of agenda item 10.

Okay. Thank you. The Board of Directors will conduct the capital reduction and update the Articles of Association accordingly.

Dear shareholders, I would like to thank you for the trust you placed in UBS Group AG and in me by approving the proposals of the Board of Directors. The detailed voting results of today's features will be published on our website following this AGM. And within the next 2 weeks, we will also upload the short minutes of today's AGM. The next AGM of UBS Group AG will take place on the 8th of April 2027.

I now invite you to an apero and wish you lively conversations, a safe journey home. Please remember to return your voting devices as you leave the hall. Dear ladies and gentlemen, I herewith close the Annual General Meeting of 2026. Thank you very much.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Right. Good afternoon, everyone. I'm pleased to be joined today by Todd Tuckner, UBS' CFO. Thank you for being with us, Todd.

And let's start with the polling question. So what do you think will be the primary driver of share price performance for UBS in 2026? We have a few choices. So clarity on capital, which hopefully is a few weeks away, earnings upgrades, wealth management inflows, U.S. or Asia and new additional buyback in the second half or macro driven? A very clear skill, fantastic. We will get there shortly. Or shall we comment first given there is such a clear -- so we're -- let's start with capital. We are nearing the end of the too big to fail. At least in April, we should get some sort of proposal. So what can you tell us?

Well, look, Giulia, first of all, thanks for having me, and hello, everyone. For sure, on the issue of capital reform, we have been advocating pretty consistently for outcomes that are internationally aligned, targeted specifically to the Credit Suisse issues and proportionate. And in fact, that was the tenants outlined by the Swiss government itself when it developed a framework for financial stability reform 2 years ago. Unfortunately, when the proposals were issued in June of last year, they were sort of none of the above. And as a result, they -- if those proposals were adopted as currently worded, we believe it would make us a pronounced outlier versus peers in terms of the level of capital and equity that we would have to hold.

So we've been clear on our position, particularly through the consultation process where proposals were sought on the various issues. The -- we'll know in a couple of weeks, as you say, or at least in a few weeks, what the capital form (sic) [ reform ] has in store for us. for sure. So -- but in the meantime, we continue to advocate for a better outcome. In terms of what the potential impact would be just last week in our annual report, we had disclosed that the potential consequence of the current proposals would be a capital increase of around $22 billion. When the proposals were first tendered last spring, we had indicated the impact would be $26 billion.

That delta -- again, assuming that we maintain our target capital ratio at the parent bank, that delta is really owing to the significant capital repatriation we were able to achieve over the course of 2025, that's always been planned to bring that capital back. Indeed, that capital is sitting at that first-tier operating subsidiary, our parent bank at the moment, just given the dollar softness relative to the Swiss franc that we've seen over the last year, which has informed a degree of leverage ratio constraint at the operating subsidiary level, and that's effectively caused us to leave some of that upstream capital there and has driven the capital ratio higher. But indeed, the -- as far as what our expectations are, we continue to advocate for a more moderate outcome.

And if I can follow up then on capital, talking about capital distribution. $3 billion share buyback was announced, and there are $9 billion upstream -- accrued to be upstreamed, which I think would leave room for another $2.5 billion buyback in the second half. How should we think about the potential for more capital distribution in the second half?

So Giulia, we committed to do a $3 billion share buyback. We're out doing that at present. We said we aim to do more, but the aim to do more in 2026 really is a function of further visibility on capital reform as we've just been discussing, we should see sometime in the second quarter. What I would highlight is that if you consider the $3 billion commitment to share buybacks that we've made for 2026, plus the dividend that we're accruing for, which would be -- we've indicated a double-digit increase on the '25 dividend. We're approaching $7 billion of capital returns in 2026, all told. And if you recall, post the Credit Suisse acquisition, we said that our ambition in 2026 was to return as much capital as we did in 2022. And at around $7 billion, even before we upgrade any of our share buyback ambition depending on the shape of the capital reform, we're already in striking distance at that level.

Perfect. So now having covered the capital topic, let's go to some of the hot topics of today. There is a very volatile geopolitical environment at the moment with the war in Iran. How are your clients navigating this uncertainty? How is this impacting your business so far in Q1?

Yes. So I would say if you look at our private clients, at this stage, given the geopolitical developments of recent weeks, I would say our clients remain engaged and active, but cautious on the private client side. On the institutional client side, I would say, engaged and active just given if you look at, for example, equity index volatility being high and even single stock volatility being even higher and that creating a quite high degree of dispersion that has been supportive of, in particular, our trading desks. But it's important to highlight, of course, that the market seems to be pricing in more short-termism still around this conflict. You could see that in the equity markets.

You could actually see that more clearly really in how the bond markets have behaved more pricing in inflationary shocks and potentially giving central bank's pause to easing. But you haven't yet seen impacts that would suggest there's a real growth issue. I think if the tensions were to persist and you move away from what are being priced that is inflationary shocks to something that really starts to weigh on growth, then I think that could really be a game changer in terms of how we would be advising clients, but also just the level of activity in the market.

Perfect. And you mentioned it helps trading desks. Any comment on Q1?

Well, I think for our markets business in the Investment Bank, the -- coming into Q1, the markets were -- continue to be constructive and supportive of our business doing well with the geopolitical environment sort of changing acutely, if not -- certainly at least moderately, if not acutely. As I said, we're still seeing conditions that are supportive of our markets business. But again, it's something that we need to clearly watch.

And if I ask you about another hot topic, private credit, credit spreads have been widening. We receive a lot of questions from investors on bank's exposure to BDCs, how exposures are structured, how senior and secured the bank's exposures are. So what can you tell us here from UBS point of view to reassure investors?

Well, as you know, Giulia, and I'm sure everyone here appreciates banks leverage to private credit, right, typically comes by dint of lending to private credit funds. You mentioned BDCs. These exposures tend to be senior secured, referencing diversified pools. So perhaps the views from other bankers are that perhaps there's not yet anything to see here. I would make 2 comments. One, the vast volume increases we've seen in bank lending to private credit funds since COVID, which where volumes have probably upwards have tripled, we haven't really seen a true turn in the credit cycle to really test those volumes. So that's one point I would make.

Certainly, if there is more systemic stress in that environment, given the interconnectivity between banks and nonbank financial institutions, you could start to see perhaps some pressure points. I believe that's the case. But whether we're seeing systemic stress, I think people would suggest at the moment, no, it's not systemic. It's maybe more at this point, one-off as opposed to something that would suggest there's a real issue, but it clearly bears watching. In UBS' case, though, I would say our exposure to private credit funds, I'm quite comfortable with. If you think about the total volume relative to our total leverage exposure, it's about 0.5% of our total balance sheet in terms of our lending to private credit funds. That exposure is senior secured. We have low LTVs or conservative borrowing basis as the case may be. And I'm comfortable with the level of exposure that we have.

Perfect. And sorry, just to quickly follow up. Private credit within your asset management business instead, what are you seeing there?

Well, I think private credit is an important part of our investment management space, certainly in terms of our fund offering. We have, for example, in our credit investment group, I mean they have largely sub-investment-grade exposures into private credit. And that's an asset class that's heavily sought after and it has been and continues to be even in the current market. Demand is strong. But no concerns in terms of -- at this stage in terms of our investment funds and their performance in respect of private credit. But as I mentioned before, I think we need to be clear-eyed about to the extent it becomes more -- there's more systemic relevance to this. Again, there is an interconnectivity that between banks and the nonbank financial institutions that can be tested.

Perfect. If I now turn to artificial intelligence. How worried should we be, in your opinion, about how AI can disrupt the wealth management business?

So I don't think AI certainly, for sure, won't diminish the value of advice. I think what it will do is it will be disruptive. And to many industries, but not least to wealth management, I believe it will be disruptive to wealth management. But I think it's important to unpack that. It will create -- AI will create a lot of improved adviser productivity. And what I mean by that is the tools that banks and talking the first person that we're investing in a UBS will make advisers and are making advisers decidedly more productive. So less admin time, more client time, more personalization, faster response times to clients. So those are quite positive. It's also quite important in an environment where more digitally native clients will, over time, inherit or exceed to wealth. And I think this is critical in terms of the way to serve. Now on the higher end of the wealth spectrum, really where we play, I do believe that characteristics like trust and judgment and risk discipline and just the overall stewardship of the client relationship will remain important.

And while it may be "disrupted", I certainly think that for a bank like UBS, we could still differentiate ourselves in that respect. But here is really the key point. that I believe that if you're clear-eyed about what needs to be done across the whole value chain, which not only includes investment in tools to support the advisers themselves, but the entire front, middle and back, then I believe that there is a lot of efficiency that can be achieved by banks investing as we are. And in doing so, even if clients ultimately endure to a lot of that -- a lot of the benefit of AI investments and a lot of the benefit of the efficiencies, not least because there are more entrants to the market that therefore, put pressure on price and top line margins, I believe a bank like UBS in Wealth Management can continue to generate quite attractive pretax margins by dint of the efficiency gains it gets front to back.

And if I stay on AI, but more general beyond GWM, Sergio mentioned on the Q4 call that UBS is investing in a portfolio of AI programs. So what can you tell us about these and the progress you're making there?

Yes. So Giulia, if you think about each quarter when I talk about the synergies that we're seeking to achieve from the Credit Suisse acquisition on a gross basis. And then I also show the net saves that are visible in our underlying OpEx. One of the big reconciling differences between gross and net is our investment in technology and in particular, in artificial intelligence. And we've really jumped into this with both feet, notwithstanding our focus on the integration of Credit Suisse. Let me offer you some examples. So I mentioned the investment we're making in tools to support advisers and adviser productivity. But I also said what's critical is what happens front, middle and back. And so one of our large initiatives is to enable AI to automate and control the most expensive parts of the client life cycle. So things like account opening, you know your customer, any kind of account changes.

These things that are often done manually and often are quite time consuming, not just in Global Wealth Management, but across our businesses is something we're investing heavily in because we believe we can automate that very important part of the value chain. But on top of that, we're making significant investments in other things. I'm sure like many banks, completely looking to rethink and reimagine software engineering, so making it much more productive, faster and efficient. And just given the level of development and engineering costs that we incur, that's a significant game changer. And then looking just in the middle office and the back office, just rethinking the processes in operations, in compliance, in credit risk and in my own function in finance, using AI to really upend the processes, make them much more efficient in the end, and I believe will contribute again to us generating attractive net margins despite AI potentially in the marketplace placing some pressure on top line margins.

Very helpful. Let me see if the room has questions for you. Otherwise, I can carry on. Okay. Let's give the room another couple of minutes. In the meantime, I will ask you about GWM again, but in the U.S. The strategy for U.S. GWM was announced about a year ago. So how do you measure the progress that you've made so far?

So in terms of our Wealth U.S. business, it's really -- let me just reiterate that, that is a very important, if not a cornerstone of our overall global Wealth Management franchise. And as well, the Wealth Management business in the U.S. is a critical part of our overall U.S. business, which is very significant to our group strategy of growing in the U.S. So we continue to invest in our Wealth U.S. business to drive growth, to improve pretax margins and to narrow the gap versus peers. Now we are clear-eyed on the gap versus peers. And it's one of the reasons that we have set out this multiyear plan, as you mentioned, to drive pretax margins higher. In 2025, we improved pretax margins by 3 points year-on-year. So we think that there's evidence of success in what we're doing, but we still have a ways to go. So what are some of the things that we're focused on?

Number one, really leaning into the collaboration with the investment bank to drive an important transmission channel of CIO advice of specialized advisory services of structured products and capital markets to our wealthiest clients in our U.S. wealth business in collaboration with the Investment Bank. That has been a differentiator when you look at transaction-based revenues in the U.S. business. It's also, by the way, have supported Global Markets and the Investment Bank as well. Secondly, we're investing in our platform in the U.S., our coverage models, our ability to distribute product seamlessly across the field. And that's resonating with our client -- our financial advisers. And in turn, that's improving the client experience. Third, we recognize the importance of improving banking, in particular, our -- the NII penetration or net interest income as a percentage of total revenues is such a critical part.

If you think about what really informs a gap versus peers, it is a distance in terms of net interest income as a percentage of total revenues. So again, we're very clear on the need to improve our banking capabilities, and we've been investing heavily in those. The feedback from advisers has been great. We've had 7 consecutive quarters of net new lending growth. So we know that it's working. We -- as I think you know, Giulia, we have conditional approval for National Bank Charter, which we also believe is fundamental. And that will add to the momentum once we move forward with that. And then the last point I would make is it was really important to us to improve the operating margins or the operating leverage in the U.S. wealth business. And so we've been very focused on and disciplined around costs.

And that even includes financial adviser compensation and the way we incentivize advisers to be aligned with our strategy of growth in the U.S. We recognize that those changes have had an impact on adviser movement, but we're working through that. We've been aggressively recruiting, and we're looking to turn the tide on net new money outflows in relation to that particular topic. But we're confident in what we're doing. And in fact, last month, when we talked about our -- during the investor update in talking about the business, we upgraded our targets. We brought our targets in, accelerated them by a year. We're now looking in 2026 to generate a mid-teens or a 15% pretax margin. And we indicated our ambition is to do high teens, around 18% by 2028.

Very clear. And if I now move to the other side of the world, Asia, where you have a leading franchise and you want to grow, you are talking about hiring more financial advisers. So how do you see the competitive landscape and the growth opportunity in Asia?

So in APAC, our growth and our performance reflects our standing as one of the preeminent wealth managers in a critical growth market for us. We're looking to build on that and reinforcing our strongholds in our Singapore and Hong Kong locations. But we're also leaning into growth markets and very focused there across Southeast Asia, Taiwan, Japan, India, Australia, to name a few that we're quite focused on. We're looking to gain market share there in those jurisdictions. We're investing in our feeder channels, and we're looking to hire up advisers as well. One important growth aspect that's relevant across GWM but also in APAC is doubling down on our foothold in high net worth.

We think this presents for us a great growth opportunity. And so we're very focused on investing in service models, enhancing our service models in the high net worth space, we're also looking to -- through strategic partnerships to gain market share as well and to also hire some preeminent high net worth advisers as well to support our growth. So -- and also, I should mention the digital channel is quite important that through building out digital, we do expect that, that will be accretive to net new money and net new client acquisition. So we're quite focused on leveraging our strength in APAC and growing from there.

Excellent. Let me check if there are questions from the room. Okay. A very busy but quiet room for now. So Investment Bank, you achieved the 15% return target in 2025. How do you feel about maintaining these returns or improving as the Credit Suisse consolidation comes to an end?

Yes. So Giulia, I mean, in the Investment Bank, we're continuing to invest in our capabilities and generating sustainable returns for our shareholders. We have a very strong -- if you look at our -- we're very well diversified across the globe. We have top franchises in Asia, across Europe and in Switzerland. And we've really strengthened our presence in the Americas. And by the way, Credit Suisse has been a real boon to the diversification and the resilience of that business. We talked a little bit about global markets. I expect global markets, again, notwithstanding my caution about the current geopolitical environment, but in the current market conditions to continue to do well, leveraging its top equities franchise, but also in FX and precious metals and also reinforced by our global research capabilities.

In our banking franchise, we've invested in our coverage teams in our product capabilities and that's adding to an already robust pipeline. And I expect Global Banking to continue momentum into 2026. I mentioned earlier in the context of the Wealth U.S. business, the fact that the collaboration between Wealth Management and the Investment Bank for us really is a differentiator. It is not a sound bite, but it really is how we go to market. And I think that continues to be a differentiator for the Investment Bank as well as for Global Wealth Management. And so that gives me confidence in our ability to generate a 15% pretax return on equity through the cycle. And I should mention doing that also with the IB consuming no more than 25% of the group's risk-weighted assets.

Very clear. And if instead we move closer to home to Switzerland, that business at the moment is a little bit challenged by rates at 0 and also the migration. So what gives you confidence in achieving the below 48% cost income target by 2028, especially given that I understand you don't plan to reach the below 50% exit rate for this year?

Well, first, I would say it's important to mention that just this past weekend, the team began the final switchover of clients in the Swiss booking center, which just in the coming days here will be complete as we go through our final checks. So that completes -- with that done, that will complete the entirety of the client migrations that we've had from Credit Suisse platforms on to UBS platforms across the globe. And in this particular case, in Switzerland. Now that is super important for a few reasons. One, the management team of the Swiss business, including Personal and Corporate Banking in Switzerland, but also Global Wealth Management in Switzerland. It frees up immense amount of management time that has been focused on clients, but focused in a way to ensure a seamless transition to this account migration. And you could see that in the evidence of minimal disruptions despite this being one of the most complex migrations in the banking industry.

And you could also see that in the level of retention that the business has been able to achieve. It's also important that now that our clients will be on a single platform, that focus on the business can be now recalibrated to focus on book transformation and focusing more so on helping clients generate healthy returns in their portfolios. So it's not just the business of the migration, which has been quite significant, but we get back on our front foot, and we're able to drive net new client acquisition and overall growth in the business. And the last point I would make why this migration being completed is so important is it then turns the page and allows us to focus on the last stage of the whole integration process, which is decommissioning and dismantling the entire Credit Suisse platform, particularly in Switzerland, by far our most expensive.

I've talked about the overall cost of running that is upwards of about $1 billion a year. So to be able to take that out is quite is quite important. Now you mentioned, Giulia, the rates environment. And clearly, the rates environment has had an impact on net interest income for the P&C business, by far, its most important revenue line. But given -- and by the way, the outlook on that with some of the recent geopolitical developments and the broader macroeconomic uncertainty that Switzerland and other countries in Europe have been facing for some time, the rate outlook is a bit mixed. We're seeing now some more vol in the rate outlook, at least from an implied forward perspective to suggest that there'll be movement in the rates. I've said in the past, there's positive convexity in that in so far of rates either moving negative or positive is actually helpful, but it's been in that sort of dead zone of just the 0 policy rate for some time.

But even if it were to stay at that level, and that's the way we have to think about it, one, we expect double-digit profit growth in 2026 even if rates stay at 0. And while we may fall just short of our underlying cost-income ratio target of 50% at the end of 2026, because of NII being a bit challenged, notwithstanding, we believe by 2028, we can generate a cost-income ratio of around 48%, even with interest rates staying at 0. Why and how? Because of the points I mentioned earlier in terms of getting back on our front foot, generating non-NII revenue growth, but also being clearly very cost disciplined and also having some of the investments in AI I talked about and digital assets enhancing the cost-income ratio for P&C when I look at the outlook.

And if I ask you about Asset Management. This division has delivered very well ahead of schedule on cost income, but also on asset growth. So if we look forward, is the 3% the right the -- in the new money, the right benchmark for this business? Could we expect more?

That's fair. I mean when I look at Asset Management, so I appreciate the comment about the operating leverage that they have generated. They have done a great job reducing costs while at the same time, integrating Credit Suisse onto the UBS platforms. They actually met their end 2026 goal a year early in generating below a 70% cost-income ratio on an underlying basis. They've also been quite focused on sharpening their product offering. If you look at the business, we're a global top 5 limited partner in alternatives. And so that gives the business along with Global Wealth Management, the scale to be able to offer quite attractive investment opportunities to our clients across private markets, hedge funds and real estate. So that's a key part of their offering. But they also have deep traction in the ETFs and indexing in our credit investments group and also in our SMAs that are delivered -- designed and delivered jointly with Global Wealth Management.

So with that product offering that we think is quite robust in addition to the efficient way in which the business is run, we look to continue to drive growth. And indeed, we have an ambition of a 65% cost/income ratio by 2028 as we articulated last quarter. But on the -- in terms of net new money growth, I also think that when I consider the array of opportunities and the product shelf that the business has, I do think 3% net new money growth through the cycle is an appropriate benchmark and ambition for asset management. Why? When I step back and look at the collective set of secular trends across the industry, I think that a 3% growth rate is sufficiently ambitious, and that's why we've asked the business to focus on that as their target.

Great. And if we move away from the divisional discussion and think about the end of the integration, we are 9 months away pretty much from it. You mentioned it earlier. So is there anything in your mind that could perhaps derail the decommissioning or you have high confidence on that? And also related to this, how does the gross cost savings target translate into net? And is there upside on achieving the cost savings?

Yes. So if I harken back to 2023, when I started devising as group CFO, my first plan with Sergio at the time, and we were sort of playing all of this out through the end of 2026. We've been consistent on our expectation was that we were going to finish the Swiss booking center client migration in the first quarter of 2026. I mean that was the plan in 2023. And we have been -- I mean, I think each quarter, we've been very clear. Hopefully, the market has seen it that way in terms of the things that we've had to do and what we have been doing to achieve that. So we're at that point. So now we have the rest of 2026 to decommission and dismantle all of the infrastructure, the hardware and the software and the data center supporting, in particular, the Swiss booking center. So we have the optionality because we're on plan, on target. Of course, we have to do the work, and we believe it's going to take the rest of 2026 to finish that work and really unlock. When I talked about close to $3 billion of gross cost saves in 2026 to deliver, a fair part of that relates to the Swiss booking center.

And so that's going to take the time. In terms of the gross versus net, I mean one comment I would make is that when I go harken back again to 2023 and think about the way we thought about gross cost saves and what would hit through as a net save and effectively inform our underlying cost-income ratio as we exited 2026, we made certain assumptions about investments. One thing I will say is that, and I commented earlier, we jumped in with both feet on AI. We've been very focused on investing in digital assets as well. And so I would say there's probably been more tech investment ultimately than we probably initially planned. And so for those reasons, I think maintaining our cost-income ratio target at less than 70% by the end of 2026 is appropriate, and we're going to need the whole year to achieve it.

Clear. You have mentioned now a couple of times digital assets. And Sergio also made some remarks in Q4 around UBS looking more at tokenization as a secular trend and looking at tokenized deposits. Can you tell us what are the key initiatives here that UBS is working on? And how do you think this can impact the business and the industry?

No, we're certainly developing the modern infrastructure and helping to develop that in Switzerland, where we've rolled out UBS Tokenize, which is effectively institutional-grade tokenization of real-world or traditional assets such as bonds, funds and structured products. through their life cycle. And so that's something that is live. We're also developing and have proofs of concept of what we're calling UBS Digital Cash, which is tokenized deposits, particularly for institutional clients to support real-time 24/7 settlements and payments. So for us, we think digital assets will improve liquidity, market functioning and also collateral efficiency. And we're taking part of that, and we believe the market and the regulator appreciate that, that's coming behind a trusted bank like UBS.

Very interesting. Thank you. And we might have time for one last question from the audience, if there is any. No. Otherwise, Todd, thank you very much for your time today.

Thank you very much. Thanks, everyone.

Good morning, everybody. I know everyone is still abuzz from the Super Bowl last night, but I'm really excited to be in the room with you this morning. So kicking off with a keynote fireside chat. I have with us our Group CEO and the President of our Executive Board, Sergio Ermotti. Welcome.

Thank you.

[Operator Instructions] So first, Sergio, let's start with what happened in 2025. We reported last Wednesday. So maybe a good way to start is now talk a little bit about our full year results and our key accomplishments from 2025.

Well, first of all, I think that for us, it was very, very important last year to get traction again in staying close to clients, helping them navigating a very complex environment and growing our business. The fact that we surpassed the $7 trillion invested assets level was quite a remarkable achievement. I think that financial results were also very strong and up substantially year-on-year.

And when I look at finally, we are getting above cost of equity. This huge restructuring has been quite costly in the last couple of years. So being through the barrier of achieving at least our cost of equity from a core and underlying performance standpoint of view was very important. So we still need to finish it, but very, very important.

It was very important to see all regions, all businesses contributing to the PBT growth expansion. So the value of our diversified business model has played out once again. If you look at from a geographic standpoint of view, Switzerland is quite large, but also when I look at Asia, U.S. and EMEA are equally profitable. And of course, the integration is almost done, but last year was a major milestone. We migrated 950,000 clients from the Credit Suisse platform in Switzerland into the UBS one. This week, or last weekend, we migrated 50,000 clients among the most complex. We now need to go through the last 100,000 in March. And then finally, we will be able to shut down all data centers, IT systems that are de facto, worth something like a couple of billions or more of synergies.

So we achieved the logistical part of the integration. Quite complex, quite risky in a sense, but also achieved our cost savings targets, almost $11 billion of cost savings since we started. We identified also an extra $0.5 billion. So -- and last but not least, for me, it's very important that we are also delivering on our capital returns promises to shareholders. We increased our dividend by 22%. So if you look back from 2022 onwards, a quite substantial improvement of our dividend -- cash dividend. We also delivered $3 billion of share buybacks.

And last but not least, I would say, really is also we are not just managing yesterday, but we are also investing for the future in terms of investing in people, capabilities, AI and preparing for the next steps because, of course, one of the biggest, call it, impediments that we had in the last 2 years that while doing such an integration, which is unprecedented in banking between two G-SIBs, is very little you can do in your operating model. You need to really rely on a clear operating model and reducing the operational risks. So that means that you are not able to adapt, or change, or optimize for the future.

Now with the integration almost over, we now have, again with Bea Martin, Chief Operating Officer that will focus on enhancing our One Bank approach to clients also in the back end, and then driving also a major initiatives in terms of how you can be more efficient and effective going forward. So a big year, but not yet finished.

Big year, but not yet finished. Let's talk about this year and maybe pull up a little bit, Sergio. I think it is an understatement to say there's a lot of volatility and uncertainty around the globe. So maybe talk a little bit about how your discussions with clients are evolving and how they're positioned across regions, and maybe get your outlook, your broad outlook over the next few quarters?

Well, look, clients -- and if I look at asset allocation and clients continues to be, broadly speaking, quite constructive. I haven't seen a major shift in asset allocation also from -- both from an underlying assets, but also from a geographic standpoint of view. Of course, at the margin, a lot of cash and a lot of new liquidity is going into either commodities, or we saw also a big rally in emerging markets. But I haven't seen a major sell-off or out of any assets.

In the last few weeks, we see a little bit more of a desire to further diversify more of a dispersion kind of environment. People here in the room are very familiar with that. I would say that at the margin, you start to see a little bit here and there the necessity of deleverage and prepare cash for reinvest if there is a drop in markets. So broadly speaking, constructive. But of course, people are really focusing on hedging, on diversification. And I would say that I fully understand that because I have a hard time myself to really look at any asset class out there that is cheap, or something that you would say, my God, this is a real opportunity. So I think investors do feel that way. But the truth of the matter is that it's not a lot of places to go in that sense.

So given that outlook and then you talked about the progress that we've made in terms of the integration, what are your key strategic priorities as you look into 2026?

Well, as I mentioned before, I think that, of course, we need to deliver -- I mean, it's not so strategic, but we need to deliver on our 2026 targets. So I mean it's quite clear that for me, it's completing the integration, both from a logistical standpoint of view, as I mentioned, the final mile of migrating these clients. It has been very complex so far, but what we did over the weekend was even more complex.

I mean we had 50,000 clients with more than half a million different position with derivatives, very complex migration. So I think that we cannot be complacent around this topic. And so delivering this integration and preparing the bank for the future, as I mentioned before, by investing in AI capabilities, redesigning our processes and managing risk in a very dynamic way is the name of the game.

So the prerequisite for us to earn our ability to think about the mid- to long term is continue to deliver and be on our ambitions in the integration. I think the UBS of today is even stronger than the one pre-acquisitions in terms of geographic footprint, product capabilities, people. I think that we got a lot of very good people that are complementing our existing talent bench. So I'm very positive that all the secular trends that support our industry, i.e., wealth creations, demographic trends, societal trends, people are having different views on how -- where they choose to leave and work, play very well into our global franchise. So we should be -- we will be a beneficiary of that.

Through our network, we can capture all of that. And so we need to be prepared for that. And so I think that's -- but we cannot be complacent. So I think the competition is quite fierce. But if we keep our focus on clients like we did in the last decades or so, keeping our discipline on our business model, we're going to be able to be a winner out of this.

So Sergio, we're sitting here in sunny Miami, Florida. So maybe it's a good way to segue into the U.S. strategy. A year ago, you gave a strategic update, really focused on improving profitability and growth. So where is UBS in their U.S. journey? And where does the company go from here?

Well, the journey is a medium, long-term journey. I would say that we needed to regroup and restore an appropriate level of profitability. I think that we have been profitable in the U.S. Now in the last 10 years, we have been profitable, but not profitable enough compared to our opportunities that we have. I think that it's fair to say that the market dynamics have changed a lot. They are not -- they have not been very favorable to our business mix in the U.S.

I think we are very large in the U.S., but not as large as some of our competitors. And I'm not talking about wealth management. I mean, we manage $2.3 trillion, $2.4 trillion of assets. So we are not small. But where we definitely are smaller than our peers is that the set of banking businesses that we have on the platform, of the U.S. platform, is not as comprehensive as our peers. And that drives some level of competitive disadvantage in being able to share this fixed cost of a banking platform across different businesses.

Now it's fair to say that we haven't really invested enough in banking capabilities. Our lending penetration is increasing in the last 7 quarters. We improved it every single quarter, but it's still below what we could do. Our checking banking capabilities, deposits is not as comprehensive as we should. Now we got a conditional approval from the OCC for a national charter, and that's going to allow us in the next couple of years to also increase the penetration of deposit and NII that will be constructive to narrowing the gap to our peers in terms of profitability and capabilities.

We are doing good progress in making the Investment Bank and Wealth Management working closer together, more specialists on the platform. We want to expand our high net worth business, and we have been hiring people to do that. We are very good at the top end ultra and GFOs. But of course, it's also important for us to leverage our platform in a more comprehensive way. So I'm glad that we were able to show in the last 18 months, 24 months, good progress in achieving mid-teens returns on pretax margin returns.

Our view is that we should be at around 18% by 2028, which is still below our peers, but that's the nature of who we are. So we can probably try to improve it a little bit more, but it's totally unrealistic for us to think that we're going to match the pretax profit margins of our U.S. peers in the U.S., like is, I would say, never say never again, but it's going to be very challenging for all our U.S. peers, which, by the way, are the largest competitors for us globally, to achieve the same level of profitability and margins that we have outside the U.S.

So that's the nature. So we are working to improve, but we have to pay attention that we don't let these things go out of balance in recognizing who we are globally and how important the U.S. is also at the same time for our global franchise.

So just wanted to unpack something in what you said. You mentioned $2.3 trillion to $2.4 trillion of AUM in the U.S. There's clearly been a lot of conversation about adviser movement and flows. And I cover, of course, all of our peers, and it's always so competitive in wealth management in terms of talent recruiting. What are you seeing in terms of how that business is going? And what is your vision for 2026?

Yes. Look it's, luckily enough, I mean in terms of at least being able to demonstrate a strategic consistency in what we are trying to do in -- globally in the U.S. We have been really anticipating that we would have headwinds on flows in the U.S.

Two years ago, we clearly say that we were expecting net new assets globally to go up $100 billion a year, which is relatively not a big number compared to the size of who we are because both in the U.S., but also internationally, a lot of work needed to be done to restore the appropriate level of profitability in terms of, for example, revenues on risk-weighted assets or mix of businesses. So we have been willing to sacrifice growth for efficiencies. This is the reason why our revenues on risk-weighted assets. If you go back 24 months, went from around 7-plus percent to 10%. That means that short term, you need to be willing to let client relationships that may be good clients, but absolutely not paying for the capital you allocate to them, totally inefficient.

Second, of course, we want our financial advisers to be able to serve their clients at best and grow their businesses. But in order to do that, we need also to make sure that there is a good balance between what shareholders makes and what financial advisers makes. So we have been really looking at reclassifying and relooking at the compensation grid for part of this population that were de facto benefiting from being part of a team of people, getting all the advantages of a large team in terms of how the grid works, but de facto never growing their business and not really contributing to the bottom line. And that, of course, is not very popular.

But we can fix that issue of restoring PBT margins by being overly popular with people that are not growing their businesses. And in our point of view -- by the way, this is the same we did outside the U.S. So we sacrificed net new money for quality of growth. And it's also very, very important outside the U.S. was a very important item in how to drive the cultural integration of the two banks because it's fair to say that maybe at CEIS, there was a tendency to look too much at top line growth, and not so much on risk return. And in a sense, it's a very coherent story.

So now in the U.S., we do expect to see already to see in the second half of the year, positive momentum in net new asset growth. And if I look at 2028, we're going to go above $200 billion in net new assets growth in which the U.S. will play an important part. So overall, we are preparing the bank for the future. We need to be able to take a step backwards in order to have a sustainable business model.

So Sergio, just also wanted to follow up on something you said, and that's on the conditional approval from the OCC on our U.S. Bank Charter. You mentioned that, that's going to strengthen our ability to gather deposits and types of deposits like checking. Are there any other competitive advantages that the U.S. Bank Charter can give the U.S. business?

No, I think that's the factor of the biggest one. I think that if you look at our NII penetration as a percentage of revenues compared to our peers, it's probably half. So I think this is a huge -- not only is where also there is a revenue contribution, but also in terms of net profit, down to the shareholders is probably one areas where we can capture some more value. So I would say that one is -- and of course, more comprehensively, if you are able to do more banking with the same clients, you are making your relationships deeper. So that's more of a -- not exaggerating, but to the extent that you can get closer to be one of the house banks beyond just wealth management, you get some advantages.

But of course, the biggest opportunity for us is to continue to work closely between the IB and Wealth Management, monetization IPOs. I mean, GDP growth and wealth creation are definitely some big topics. But at the end of the day, big levers for our business is monetization and across the globe, not only in the U.S. I mean, we need to be there when people are -- IPO their business. They are selling their business. We need to be closer to them when they do their wealth planning, their succession planning. I think that we have trillions of dollars going to the next generations in the next 10, 20 years. We need to continue to be the same bank that like in the last 150, 160 years, we have been able to bank with fourth, fifth generation of clients. We need to continue to do that. And this is where the value is going to come from, so.

So all 6 of our U.S. G-SIB peers are going to be here at this conference. And I suspect that deregulation in the United States is going to be a big topic, which is, of course, going to -- turn into where they're going to allocate excess capital. Now in Switzerland, the tone is a little bit different and maybe the conversation is a bit opposite.

Could you update us on where the conversation is going in terms of too big to fail reform? And given what's happening in the U.S., what does that mean for how you're allocating capital, how you're thinking about the business?

Yes. A little is a little bit of a diplomatic representation of the situation. So I would say that Switzerland has chosen a quite emotional reaction to what happened with Credit Suisse, which was to some extent, totally understandable from a political standpoint of view, also for the broader population. So I think that many of you probably in the room don't know, but basically, Credit Suisse -- the founder of Credit Suisse was a big figure that established a lot of the industrial development of Switzerland in the infrastructure one, and was also a big person in terms of funding the polytechnic universities. And so it was a very emotional situation. So in that sense, all right.

So -- but what happened in the last 2, 3 years, of course, the emotions didn't really come down. And at the same time, you see the regulatory landscape developing in a very competitive way, adding on to the fact that the existing regulation in Switzerland is already the highest. I mean if you look at UBS today, we have a de facto the highest minimum capital requirement of any G-SIB. And this is not an opinion, it's a fact, demonstrated by expert and many other people.

So I think that this is now in a political process. It's good that the parliament is now looking at this matter more -- less emotionally, I would say. And in the next 2, 3 months, we're going to find out what it is. I always say that the current proposal as displayed are not acceptable, are making our business totally uncompetitive. And so we will make our case till the last minute on making sure that we can continue to operate successfully, as a global bank out of Switzerland, for the benefits of not only shareholders and clients, but I think also the whole country. But of course, it's not in our control.

How does this background impact how you're thinking about deploying capital for growth and also capital return plans?

Well, I think for the moment, we are definitely not restraining our growth and business ambitions. So I think that's -- fortunately enough, we don't have a capacity issue of generating capital to deliver on growth, and to deliver on -- even our capital return policy. I mean that's not the issue. The issue is that whatever new regulation comes, or we will have enough time, and that has already been stated by the government and that we will have enough time to build it up to that level. So the debate is not about can you really grow and do share buyback, but it's what is the ultimate level of capital you have to hold to do the same business compared to your peers?

So we're not going to stop growing. We're not going to stop doing the right thing for shareholders. But eventually, the debate is, can you be competitive in terms of return on capital? And I believe that from a strategic standpoint of view, this is one of the most important topic that is too often neglected. And I know I'm talking with an audience of shareholders, and I don't need to convince you on that one, but shareholders are the first line of defense.

So when people talk about the resilience of a banking system, they should understand that the first thing to do is to have, of course, a solid capital, but the second one is to have a solid, sustainable business model. One in which shareholders believes in. And if some things happen, they are willing to consider building and bringing more capital in an emergency situation.

But if you have a structural competitive position that doesn't allow you to earn the same level of returns for a given unit of capital, then is where we need to be aware. So my issue is not about what we can do in the next 3 to 4 years. My issue is to say how can we compete over the long term? And this is the reason why we need to make sure that clients, shareholders, employees do believe that we have enough resources to manage the medium term, but the real debate is the long term.

So we're also going to be expecting to hear from our peers about what some investors call the capital markets renaissance. I think there's very, very lofty expectations in terms of the type of activity levels this year.

So maybe talk about what you think -- what kind of activity level we could see from UBS in 2026? What you're most excited about? And you talked about lending and the IB and wealth working together. Where are areas that you're looking to build out further to gain share?

Look, I mean, like our peers, we are seeing a very, very good momentum in the capital markets pipeline coming from corporates, but also sponsors and also, I would say, the institutional clients are willing to really look at how to deploy capital at the right level. But I don't want to spoil the party by saying that while I'm fully confident about the pipeline and the quality of the pipeline is there, this renaissance was something that we were discussing a year ago, and you remember how the first quarter turned out to be.

So we should not underestimate that geopolitical and macroeconomic developments, and the current volatility will continue to lead into -- stop and goes also in terms of windows, when you can execute certain transactions. And particularly when you speak about strategic M&A and big, big discussions, I mean, this is -- the geopolitical landscape, the uncertainties are definitely something that I would see -- corporates are much more willing to take that kind of risk compared to a year ago, but we should not underestimate. That it's still something to be prudent.

So I wouldn't really look at 2026 per se or trying to pick up any given quarter, right? Other than saying the pipeline is robust. It's even stronger than last year, but market needs to be there and a degree of stability needs to be there in terms of allowing us to execute on the pipeline.

So scale is a big factor for success in investment banking. And obviously, our U.S. peers continue to get bigger. Do you feel like UBS has enough scale to compete against our large U.S. peers and deliver attractive returns in this business for our shareholders?

Well, it depends what you -- in 2011, '12, we made a clear decision that we did not want it to be an investment bank that is a one-stop shop, that does everything to everybody. So I think that back then, we had to recognize for strategic, but also realistic consideration that Basel III was a reality. That -- and in order to really rerate our stock, we would need to focus on what we are very strong at, while continuing to do -- be very competitive in areas that are not as -- where we are not the #1 leader. So that's the reason why back in 2011, '12, we say, look, we are undisputed. The only truly global wealth manager, undisputed. We are the leading bank in Switzerland, undisputed. Those are the cornerstone of our strategy.

But then they need to be -- in order to be successful in these two businesses, we need to be strong in asset management and in the IB. But only in the areas where we see that we can be competitive with institutional investors and corporates, and at the same time being quite relevant to the rest of the franchise, right? So, I mean, if I look at our equity business, research capabilities, prime brokerage, part of our capital markets, FX, precious metals, we are a leader. So we are able to compete with the best-in-class. Actually, in some areas, and you saw our gain in market share in the last couple of years has been quite significant. So we are a top player.

But maybe we are less of a top player in other areas, particularly that are areas where capital consumption is very high. Capital consumption is not always justified by the ancillary businesses that we can bring to corporate clients. I mean, for example, by lending more and having -- you could probably get access to ancillary businesses with corporates like in treasury or debt capital markets, but this is not part of our business model. So we need to really understand what are we good at? What can we really excel? And -- while not pretending to be a one-stop shop.

So short answer, we have everything to be very competitive in the areas where our clients want us to be competitive. And so that means accepting that when you look at league tables that are -- particularly when they are the more broader one, maybe we are not popping up there. But what I care about is the league table and the market shares in all the areas where we make investments like in banking, in health care, TMT, in the broad industrial sector with financial sponsors. As I said, equities, FX, capital markets. We are a top leader. So I look at that data point. Are we earning enough out of our investments? Are we competitive financially and qualitatively? And the answer is yes, and I see still room for us to improve.

So maybe just shifting topics to alternatives, which has been quite the talk of the market, particularly in the private markets. So a lot of investors are talking about both the secular growth opportunity. At the same time, there are growing concerns over credit quality. And some of our competitors have been making acquisitions to grow scale in this space. How is UBS positioned to benefit from the continued growth of alternatives in private?

Well, actually, our biggest M&A success in the area was merging internally. I think that by merging our alternatives capabilities that we had in the U.S., in Wealth Management outside the U.S., in asset management, we created last year, the fifth largest LP in the industry with $330 billion of assets. And that scale is now allowing us to be a strategic partner to the most attractive and competitive GPs and offer a breadth of capabilities and products, not only to our wealth management clients, but also more and more to wholesale and institutional clients that are strategic partner of ours. So I see this as an enormous growth.

If I look at our penetration in alternatives in our asset allocation, our CIO, and I would say also external trends indicates that over time, an ideal asset allocation should contain around 10%. Some people are even talking about 15%, I would say, 10%, let's call it, allocation to alternatives. We are now at 5%. And it's a journey that needs to go through. I fully -- in some areas, the speed of this penetration of alternatives has been, generally speaking, outside, I see a little bit too fast. I mean I fully understand that many subset of alternatives haven't really seen a recession, haven't really seen a huge dislocation.

I mean we saw dislocations, but they were all V-shaped dislocations. They didn't really have time to really assess any proper mark-to-market of any assets that are private over a few quarters of slowdown or recession. So in that sense, alternatives, they also need to go through, or part of the alternatives, they need to go through a proper validation, call it...

Credit cycle.

Credit cycle, particularly in credit. I believe that credit -- private credit will be part of a capital or funding stack of corporate, or part of the asset allocation, but there is no free launches. I mean I think that how things have been rapidly growing, when you have such kind of expected returns, you can't really expect a free launch and no risk.

So -- and I'm not so sure -- and so for us, it's very, very important because we manage our first order risk on our balance sheet, quite -- I mean, I'm not really concerned about it. But our biggest risk is to make sure our clients fully understand what they are doing. Our biggest risk is suitability, right? So it's -- and history tells us a very clear lesson. When people lose money, they are all pretending to be stupid and unsophisticated, no matter -- right, no matter how good they are, right? So we need to pay a lot of attention because I see that this being the biggest risk by far.

So one more for me, and we do have a question from the audience that I wanted to ask you. You mentioned AI several times in the beginning of our chat. So maybe talk a little bit about what you think the impact will be from AI for the industry overall over the next 3 to 5 years, and then specifically for our firm?

Well, I think that from my standpoint of view, if I look at what it's already available today and if I look at the kind of business we are in with a lot of front-to-back processes, very -- being very manual intense, very, very full of opportunities for enhancements. I think -- and what I see, the capabilities of AI is already today, I think that we're going to be busy for the next 3 to 5 years, and we will be able to create a more efficient and effective operating environment through that.

So I do see value in how people will eventually also deploy AI in terms of serving clients, enhancing products. But 80% of the value I see in the next 3 to 5 years for us is back-end processes, efficiencies. And this will free up resources. By the way, all of that -- the vast majority of all of that will go to the benefit of clients. So I mean, we can -- I mean, our industry is a highly competitive industry as we all know. And of course, some of it will go to the bottom line, but the vast majority will go to the benefit of clients.

This is so important because I believe that the winner, the one who can really deploy AI and create better -- not only better product, but more efficient product, cheaper products will use that competitive advantage to gain market share. And therefore, it's vital for us to be now fully focused on that. I keep mentioning to myself and to my colleagues that we cannot be complacent about having had a fantastic run and integration. It's not enough. You need to really continue to have the same kind of focus because the changes we're going to face in the next 3 to 5 years, even if they are discounted by 50% of what people are talking about, they're going to be profound.

Most likely, they're not going to be as quick as everybody expects, but they're going to be much more profound than everybody expects. So this is the way we are preparing for the future. And I'd rather her on the conservative side in being overly, call it, focused on that topic than being complacent.

By the way, there's a U.S. CEO called Jamie Dimon that agrees with you that a lot of these productivity gains are going to be competed away. So we have a question from the audience. Given the opportunity in the U.S. and the pending regulatory backdrop, there is sometimes a discussion on redomiciling the business, or at least shifting where capital is allocated further. Is this sort of thing realistically even possible?

Well, shifting capital outside -- to the outside the U.S. while staying domiciled in Switzerland regulated under the Swiss regime won't help resolving the structural topic I mentioned before. So redomiciliation is definitely not something that we are now focusing. We are really, as I said before, investing a lot of energy and resources to really make sure that all the decision-makers are making decisions for the future of the regulatory framework in Switzerland based on facts and not emotions, fully aware that the current proposal are not acceptable, are not viable. Are not something that we believe are in the interest of any of the stakeholders.

So we're going to just focus on that one. We don't want to speculate about this topic because our preferred option is to continue to be a global bank based in Switzerland. And this is something that we want to continue to drive the focus in that way for the next months, until the solution is found. And only then we will make a decision on what is most appropriate.

Great. We're actually out of time. So thank you very much Sergio, for joining us.

Thank you.

Thank you, guys, for being in the room.

Good morning, and thank you for joining our media call. As usual, we are joined this morning by group CEO, Sergio Ermotti; and our group CFO, Todd Tuckner. You would have seen that in addition to our fourth quarter and full year results for 2025, we've also presented an investor update earlier today.

Let's now open it up for questions. Operator, please go ahead.

The first question comes from the line of Alich Holger from Handelszeitung.

Two questions quickly. First, coming back on the P&C unit. One analyst asked about the 2026 exit rate of a combined ratio of beneath -- below 50%. Just to clarify, you said you're optimistic that thanks to the decommissioning and new business, you will reach that target or that ambition. Just to clarify, so you can go to under 50% without further strengthening cost-cutting efforts, the first one.

Secondly, you said you streamed CHF 9 billion to the UBS AG, where CHF 4.5 billion will be upstreamed to the group in terms to pay the share buyback and the dividend. So CHF 4.5 billion stays at UBS AG in terms to prepare maybe the strengthening of the capital rules. To clarify on that, how much money is yet there parked in total at level UBS AG? Is it more than the CHF 4.5 billion? Can you give us a total sum there to clarify that?

So let me take the first question by reading you what I said so that we have clarity again. In terms of our financial ambition, it is likely that the Swiss franc interest rate headwinds that have persisted since 2024 will delay the achievement of an underlying cost/income ratio below 50% by the end of 2026.

Okay.

Second question?

On the second question, you asked in UBS AG, how much is, in addition to -- I think I understood your question is we have accrued a CHF 9 billion dividend. We're paying CHF 4.5 million of it in the first half. We will revisit whether we pay the second half later in the year, not least also owing to developments in the capital framework. So I think you're asking what else is there in the end, if -- at this point, I have additional capital that was upstreamed this quarter that I would also eventually upstream to the holding company, in addition.

But as I highlighted during my comments that there are FX driven headwinds on our Tier 1 leverage ratios that prevent me from -- while maintaining prudent buffers, prevent me from upstreaming as much as I would have otherwise done, in order to bring the equity double leverage ratio at the holding company to around 100%, which is where we've guided in the past, which is also equivalent to the pre-Credit Suisse acquisition levels.

So that -- the money that is constrained in terms of being upstreamed because of the Swiss to dollar Swiss rate is, if you will, for now, seeing a surplus capital in the parent bank.

And the total sum that is in part at the level of UBS AG, which is possible to upstream to the group, what is the total number in 2024, there has been upstreams too, if I'm not -- if I'm correct?

Well, last year, we upstreamed -- we paid CHF 13 billion last year in '24. And this year, we expect to pay CHF 9 billion up from the parent bank.

And it's very important to remember that this kind of upstream was always part of our planning process. This is not new discovered capital. It was always there. We all knew that subsidiaries of Credit Suisse were overcapitalized for the reasons we know. And now that we were able -- we were able to derisk much faster than expected, we are able to upstream faster than expected, but this is no new capital.

The next question comes from the line of Mercedes Ruehl from FT.

Just wanted to get some clarity on the U.S. licensing process in terms of the remaining steps between the initial conditional approval and final authorization. What does the expected time line look from here? And more broadly, how would you characterize the U.S. regulators engagement with your license applications so far in terms of responsiveness and pace?

So the time line in terms of moving from conditional approval to final approval is something we expect during the year. And the engagement has been obviously quite constructive with the authorities, with the OCC and the Federal Reserve on the topic. Because naturally getting the -- securing the approvals means that they're satisfied that we're working towards their heightened standards that they require in order to get the national charter.

The next question comes from the line of Young-Sim Song from AWP.

I have two questions. One regarding your outlook. I would like to know, do you see this quarter in a similar light as the fourth quarter? And do you expect volatility going forward this year due to political events and geopolitical issues? And second question regarding regulations. What do you think of the proposal to have your foreign subsidiaries fully capitalized but part of it via AT1 bonds?

So on the first question, in terms of our outlook, as we entered the year, and you can see this in our outlook statement, we felt like the markets were broadly constructive in terms of markets, the equity markets, reflecting higher dispersion and lower correlation and informing reasonably good market conditions for our trading businesses and on our private client side.

Clearly, the first quarter, as we came into it, remain risk on, albeit requiring diversification across asset classes and geographies as we've seen. But as we also highlight in our statement, there's a lot of -- the potential for event-driven volatility and spikes in volatility is high, and we're seeing that just if you look at some of the commodity issues of late, geopolitical issues, just even some of the AI issues from very recent just makes for significant fragility. And where we need to watch the impact, whether it turns into longer-term trends. So that's something where we need to watch. But it's, of course, too early to call, if what we saw coming into 1Q is something that will continue or will fundamentally change as we move through the year.

On the AT1 topic, I think that, as you saw, these options about any other potential remediation or alternatives to how to capitalize the foreign subsidiary were totally dismissed in a very superficial way when the proposal was pointed out. So we do welcome the fact that different stakeholders are interested to go deeper and analyze other options that are available so that we can have a more fact-based discussions around how to address the lessons learned from the Credit Suisse failure.

I just want to remind once again, and I will keep doing that. Credit Suisse didn't go down because the Swiss capital regime was weak. Credit Suisse went down because, among other reasons, it was allowed not to fully implement the Swiss capital regime, and it's time for people to recognize that and take the appropriate accountability.

The next question comes from the line of [ Christian Colder ] from [ Blake ].

I've got two questions. First one, is it true that at the end of the integration process, mainly former Credit Suisse employees will lose their job, and why is that so? And how many former Credit Suisse clients lost during this migration process?

On -- let's start with the client. I think that when you merge the two largest bank in any country, in any mergers and every level, you always have a situation in which clients are looking for diversification.

If you look at our market share developments, we lost some market share that was somehow expected because of what I just mentioned. But also, we lost some clients that basically add relationships that were absolutely not justifiable in terms of return on capital deployed. So we're economically not viable businesses. So in that sense, we fully understand and appreciate that many of them may be frustrated why they are not getting the prices that they wanted to have, but this is not reflecting. We need to deliver sustainable return. We need to build up resilience in our business with the appropriate level of risk reward when we price our balance sheet and our credit.

So I have to say that I -- when I look at our expected outflows, as a consequence of the merger, we were expecting more to lose more clients, and I'm very happy that despite the fact that the team has been very busy in managing the integration, we kept the vast majority of the relationship and clients with us. And very soon, when people are going to be able to focus on growth, I'm pretty convinced that we're going to be able also to show the benefits of the full -- of our full franchise and a new platform.

In terms of that kind of assumptions, as you know, better than I do, being on the reporting side of the equation, I have a tendency myself, not really to believe everything I see written on newspaper. So please -- I can only assure you that when we manage this process of redundancy, which is painful, we do it with a one thing in mind. We are one team, one bank as of March 2023, but more so as of June 2023.

Many -- remember that Credit Suisse started itself, a massive cost reduction and head count reduction. So that one was ongoing and would have happened in any case. So in a sense, it's quite natural that you have a skew at the very beginning of the process that may be higher on Credit Suisse. But when I look at numbers, and we're not going to engage in public discussion about these numbers, I can assure you that the outlook is very balanced because it's driven by meritocracy. So anecdotal situations of single situations making an headline doesn't necessarily then reflect the true of what's happening. We are very focused to treat the people fairly. It's a painful exercise, and this kind of speculation are just unhelpful, but I mean, I guess, are part of the game.

The next question comes from the line of Ariane Luthi from Reuters.

I have two questions. The first one is on yesterday's hearing in the U.S. Senate Committee on the Barofsky investigation. How do you assess this process? And are you taking any kind of action or preparation in advance of the release of the report this year?

And the second question is on the AI triggered sell-off, especially for software and services firms that we've seen since yesterday. What do you make of that? And how are you helping your clients navigate this?

Well, we feel about it. First of all, let me tell you that I'm very pleased and I'm proud on -- with -- how Barbara and Rob handled that session. I mean it was not necessarily a very challenging and very confrontational environment, and they managed the discussion professionally and with a fact-based points, which was reflecting that we were there to basically talk about a legacy matter that we narrated from Credit Suisse, and that we are now helping to resolve by giving as much transparency as we can with substantial effort that we are doing in terms of time and money that we spend for this investigation, including the people that are there advocating that are definitely somehow conflicted in all these stories.

Now the issue is that we will continue to do so. But one thing that we cannot do is to go into reaching the law. So if anybody thinks that we should do more, we may be able to do more, but the law has to change. We cannot go through panel criminal actions and putting the firm or people in criminal in a legal danger zone because people want to have data. So we need to be able to do that. And if the law doesn't change, there's going to be a limit on how far we can go. We now got to wait and continue to collaborate and sustain the investigation until it's over. And there is nothing more to do for us, to be honest.

The next question comes from the line of Margot Patrick from Wall Street Journal.

Sergio, first, I just wonder, can you tell us if UBS is going to look at its own archive as far as not business because looking at the Berger report, there was virtually 0. But now we found 900 accounts at Credit Suisse. So it just seems like kind of unlikely that there wasn't some at UBS. And second, I just wonder if you could talk a little bit about the trajectory of the net new assets and how you get to the CHF 200 billion target.

Margot, I'm not going to respond to this provocation and assumptions that has no merit. There is no indication that we had anything at UBS. And this is not a UBS matter. This has to do with a Credit Suisse legacy matter.

So -- what is the second question, sorry?

It was about the net new asset trajectory to get to the CHF 200 billion a year target.

Margot, so on the bill to 200, I think it's important to recognize that the CHF 100 billion guidance that we had in '24 and '25 was a function of a number of flow headwinds that we needed to work through. And each quarter, I took the market through what they were and the progress that we were making. And we always said, by the end of 2025, we would have worked through the majority of those headwinds, and that itself will be a basis to see our net new assets growing to where we think they'll get to by 2028.

And so we stand by that.

And so some of the headwinds that we needed to work through with the balance sheet optimization work, I talked about that on today's call that we had completed, and you could see that come through in much higher revenue over RWA margins. Also the win back that we had -- win-back campaign that we had on assets, giving rise to a significant level of fixed-term deposits back in 2023 to stabilize the Credit Suisse platform and then ultimately had to land those. Those are examples of the headwinds that we talked about.

So with those now complete and in the rearview, we don't have the tailwind -- the headwinds weighing on our ability to drive NNA higher. So that's how we look at it. And that's why we -- as Sergio mentioned on the call, we would expect to see net new assets around CHF 125 billion, growing from the CHF 100 billion in 2026, and we take it from there.

The next question comes from the line of Daniel [ Zula ] from [indiscernible].

Yes. I also have two quick questions. The first one is the more simple one. It's on the capital situation and this famous equation, the CHF 26 billion that we were told you need to build up over the next few years if the Federal Council imposes its plan. Now we -- as far as I can tell from the latest figures, we are down at CHF 21.5 billion, i.e., it's CHF 26 billion minus CHF 4.5 billion. And I would like to first understand whether this equation is right. And in case the things proceed as they have done in the past, you could probably be in the range of CHF 10 billion within 2 years or something, if my calculation is right. Maybe you can elaborate a bit on this?

And the second question is also on the hearing yesterday. As far as I understand, which created quite some upheaval as your request to Judge Korman to forbid to some parties like the Simon Wiesenthal Center to actually publicly promote solutions to this situation and ask for more -- for an additional payment after the 1999 Holocaust settlement that I would invite you to comment a little bit on your legal strategy there.

And also, I didn't perfectly understand your point about laws that have to change in order to help you to be more effective in assisting the solution there.

Right. Let me try to go through that. First of all, as I don't know how many times we have been saying that, and Todd mentioned it during the analyst call, the fact that we are quicker in repatriating capital, it doesn't mean that, that amount of capital was not computed when we were assuming and calculating the CHF 26 billion. So it's a very, very, very simple equation. So your calculation and your assumption is wrong. So you cannot deduct it because this is money that we were expecting to come back but at a later time, probably during 2026 or even 2027.

The pace at which we were able to take down noncore -- the noncore assets and restructuring the balance sheet of the firm and the good collaboration and with foreign authorities allowed us to repatriate capital sooner than we anticipated. So there is no double counting. There is no low-hanging fruits. And for sure, has nothing to do with the fact that we're going to have to build up the CHF 26 billion of capital that we outlined back then under the assumptions that we used at that point in time, of course. So I hope I clarify that point because it's very dangerous to double count money. So this is not.

Now in respect to the second topic, our request to Judge Korman was only in respect of confirming the scope of the 1999 settlement, which, as you know, has been quite comprehensive and was meant to close the chapter on any kind of liabilities by Swiss banks, and particularly in respect of UBS and Credit Suisse. What we are doing is that we are collaborating heavily and investing money to allow further through to emerge or new data to emerge. And to the extent possible, we are doing that. And you saw yesterday, our outstanding there to respond for a legacy matter of Credit Suisse was a testament of our commitment.

Now as we discover new paper or we have new paper, some of them can be shared with the investigating people, some others are subject to restriction of privacy and confidentiality that if released to third party, would be a breach of law under Swiss law. And this is not something that we are prepared to do without a clear pass by the appropriate authorities, I don't know, I mean, change in the law has to be triggered. So we cannot do unlawful actions and make ourselves then liable.

Our people, myself, my colleagues in the Executive Board and institutional lead bank cannot take on an additional risk to be ensued by parties that will accuse us of breaching privacy laws. So our legal strategy is very clear. We want the legal framework that was used in 1999 to close that chapter. And if we want to go deeper into what happened in history, more than happy to collaborate, but we need to be protected. We cannot do it without that protection.

Why is the public promotion of the case from parties like Simon Wiesenthal a problem for you?

What do you mean is a problem?

Well, you are in this famous letter to Judge Korman, you are explicitly asking the judge to forbid the promotion of these parties actually.

Because these parties are trying to reopen a matter that was closed and settled in 1999, which has nothing to do with discovery of the truth. This has all to do with potential claims that they want to put in place.

So again, you may want to have your opinion about matters, but don't put words in our mouth. We want, as far as we can, to help the truth to be known in the marketplace, and we are not against anything that goes into that direction. What we are against is reopening a matter that has been closed, of course, back then in 1999, where we did a comprehensive settlement, and the judge that made that decision is the one that is more appropriate to make an assessment. If we believe that whatever happen right now should be treated as any particular new information or should be treated as part of that settlement. So we are just asking the same person that made that judgment to judge. So I would reverse it. Why do people have a problem with that? If a judge is not a UBS representative making that decision. It's a judge.

The next question comes from the line of Myriam Balezou from Bloomberg.

I just have two very quick questions. The first one is around the O'Connor sale. So there was a loss that was booked. And I just wanted to -- I wonder if you could just walk me through what it means? Does that mean that the business carrying the value was higher than the purchase by Cantor? Just trying to understand the accounting here.

And then the second question is around the U.S. business and the attrition. I was wondering if you're hiring to get AUM back up? Does that mean that the progress that you've made in reducing costs will now be reversed?

So on the loss, yes, that's what it means that the proceeds that we received was less than the cost basis ultimately. But the difference from what we disclosed in the beginning or middle of 2025 versus where we ultimately came out was just a function of a change in the sale perimeter resulting from some of the events that happened at the end of 3Q into early 4Q.

In terms of the U.S., the FA attrition and the work that we're doing around -- all the work that we're doing to improve pretax margins, I think it's important just to reiterate that we said that the changes to the compensation grid were among the changes that we introduced and considered necessary a year ago to improve the pretax margin in the business and sustainable profitable growth. So the -- we expected that there would be some adviser movement as a result. We're seeing that. We're still working through that. But how we're working through it will not impact on the pretax margin in terms of cost to achieve that outcome, no.

The next question comes from the line of Steve Slater from IFR.

I had a question on Global Banking. It just seems you're a little less confident of achieving the aim of doubling revenues compared to 2022. So can I just ask where is that going well? And where could it do better? And do you need to step up hiring in any areas to sort of reach that goal?

Thank you, Steve. Can you explain me why are you coming to that conclusion?

Well, I think in the past, you were talking about doubling in 2026 and now you're saying on an annualized basis at the end of the year. So it just seems you pushed it back slightly, but I may be misreading that.

Well, obviously. But I guess I understand the point, but I think directionally, we are quite confident. When I look at our 2026 pipeline and I consider current market conditions, if they persist and also looking at the last 6 months trailing, our market shares in the areas where we want to expand our market share, which is not the full M&A fee pool, right? So -- and it's not the full capital market fee pool, but it's very selective. We feel confident that we can achieve that. So I think that it's a very competitive marketplace, but the momentum is still there. And as I said, the pipeline is building up nicely.

But the real question I have is more around the feasibility of the execution of this pipeline because of volatility and market condition than it is, but this is applicable to all our peers. So it's not an idiosyncratic issue. So what is the market condition. And of course, like last year, you remember, we had a very promising outlook for the first quarter of 2025, and it turned out to be one of the worst quarter on record in respect of execution and for sure, when compared to the pipeline or the expectation.

So we remain confident that this is something that we can achieve in a good way also because there is a good diversification between sponsor-led transactions and corporates, strategic M&A, IPOs. We see also a constructive environment in -- with institutional investors looking at IPOs. So I would say we are definitely -- we haven't really changed that kind of view.

Last question for today comes from the line of Oliver Hirt from Reuters.

The first one is, would it be fair to assume that the bulk of your layoffs in Switzerland, the 3,000 people, is coming in the second half of this year?

Then secondly, could you say how -- your FTE number a year from now, how much will that be? How many employees will you have a year from now?

And finally, could you give an indication of the size of the bonus pool for last year?

So in respect of the reduction in force will start already in the first part of the year. Of course, it's going to go probably more into the second half of the year. What we still do is we really look at every single opportunity to manage this reduction in force vis-a-vis our attrition, and to the extent possible, to try to minimize any implication on proactive redundancies.

So we were able, last year, for example, to fill 2/3 of the open roles that we had business needs by redeploying people that were probably due to be reduced in force, so by re-skilling and retraining. So we're going to continue to do that. But yes, probably it's going to be more towards the second part of the year and early part of 2027. We are not giving a head count. We published our head count at the end of each year, but we don't give guidance on overall headcount. We are managing costs. We are managing a broader spectrum of KPIs. And on a quarter -- every quarter, you will see how we progress on that.

And for the last questions, you have to wait the release of the compensation report.

But probably more than last year, that would be correct, I guess right?

Yes, you will find out -- you will find out when we publish.

Thanks again for joining this call. If you have any additional queries, please reach out to the media relations team as usual. And with that, we'll close the call. Have a good day.

Ladies and gentlemen, the media Q&A session is over. You may now disconnect your lines.

Ladies and gentlemen, good morning. Welcome to the UBS Fourth Quarter 2025 Results Presentation. The conference must not be recorded for publication or broadcast. [Operator Instructions]

At this time, it's my pleasure to hand over to Sarah Mackey, UBS Investor Relations. Please go ahead, madam.

Good morning, and welcome, everyone. Before we start, I would like to draw your attention to our cautionary statement slide at the back of today's results presentation. Please also refer to the risk factors included in our annual report together with additional disclosures in our SEC filings. Throughout our remarks, we will refer to underlying results in U.S. dollars and make year-over-year comparisons unless stated otherwise.

On Slide 2, you can see our agenda for today. Todd will first cover fourth quarter and full year results, then Sergio and Todd will take you through our investor update before moving to Q&A.

It's now my pleasure to hand over to Todd Tuckner, Group CFO.

Thank you, Sarah, and good morning, everyone. Disciplined execution in the fourth quarter underpinned a strong year of financial performance as we continue to progress towards our post-integration profitability targets.

In the quarter, we delivered reported net profit of $1.2 billion and earnings per share of $0.37, while group invested assets exceeded $7 trillion. Underlying pretax profit was $2.9 billion, up 62% year-over-year as continued revenue momentum in our core franchises and cost discipline across the group resulted in 9 percentage points of positive jaws.

Total revenues increased 10% versus the prior year, driven primarily by strong top line growth in both Global Wealth Management and the Investment Bank, as we leveraged our competitive strengths and unrivaled geographic footprint to capture opportunities in broadly constructive market conditions. We delivered a further $700 million in gross cost saves, reflecting steady progress in decommissioning technology, integrating functions and reducing third-party spend.

Total operating expenses were 1% higher with realized synergies largely offset by higher variable compensation accruals on the back of stronger revenues. Excluding litigation, variable compensation and currency effects, costs declined 7%. Taken together, sustained execution, combined with disciplined cost and balance sheet management drove further improvement in our underlying metrics during the quarter, including a cost-income ratio of 75% and a return on CET1 capital of 11.9%.

We remain on track to deliver on our key integration milestones, including completing the Swiss Booking Client Center migrations by the end of this quarter, an important enabler to achieve the remainder of our cost savings through the end of 2026.

Moving to Slide 4. With underlying pretax profit growth across our businesses, we closed the year on a strong note and sustained the consistent performance delivered throughout 2025. This quarter, we once again leveraged the strength of our business model, powered by our international scale, deep client connectivity and differentiated capabilities to help clients navigate an environment marked by complexity and unpredictability.

On a reported basis, revenues included net negative adjustments of $54 million, primarily reflecting a net loss of $457 million from the November buyback of $8.5 billion of legacy Credit Suisse debt instruments that were issued at distressed spreads prior to the acquisition, offset by other merger-related PPA adjustments. Buying back this expensive legacy debt early and replacing it with low-cost funding is not only NPV accretive, but will also benefit the net interest income of GWM and P&C in the coming years and reduce the net funding drag in NCL.

Integration-related expenses were $1.1 billion, reflecting the continued high intensity of the Swiss client account migration and ongoing work across the group to deliver key integration milestones. The effective tax rate in the quarter was 29% and 12% for the full year 2025.

Turning to our balance sheet on Slide 5. As of year-end, our balance sheet for all seasons consisted of $1.6 trillion in total assets, down $15 billion versus the end of the third quarter, primarily reflecting the liability management exercise just mentioned and net redemptions of other long-term debt.

Credit impaired exposures remained stable quarter-on-quarter at 90 basis points, while the annualized cost of risk was 9 basis points, reflecting the quality and nature of our lending book. Group credit loss expense was $159 million, mainly relating to credit impaired positions in our Swiss business.

Our tangible book value per share grew sequentially by 1% to $26.93, primarily from our net profit, which was partly offset by share repurchases. Overall, we continue to operate with a highly fortified and resilient balance sheet, with total loss absorbing capacity of $187 billion, a net stable funding ratio of 116% and a liquidity coverage ratio of 183%.

Looking ahead, we expect our LCR to remain around this level, reflecting both the prudent buffers we have long maintained and the more stringent Swiss liquidity requirements, which were fully phased in by the end of 2024 and which are more onerous than those in other jurisdictions. Maintaining this resilience requires holding additional HQLA, and we will continue to manage the associated carry and balance sheet impact with discipline.

Turning to capital on Slide 6. Our CET1 capital ratio at the end of December was 14.4%, and our CET1 leverage ratio was 4.4%, both lower sequentially and closer to our targets of around 14% and above 4%, respectively. The sequential decreases largely reflect a reduction in CET1 capital as strong operational performance was more than offset by accruals for shareholder returns of $4.1 billion. Of this amount, $3 billion relates to intended share repurchases in 2026, which we'll cover later in more detail. A further $1.1 billion relates to the full year 2025 ordinary dividend, which at $1.10 per share is up 22% on last year. CET1 capital also decreased by around $0.5 billion due to the liability management exercise.

Turning to UBS AG. During the fourth quarter, the parent bank stand-alone fully applied CET1 capital ratio increased to 14.2%, up sequentially from 13.3%. This increase largely reflects $9 billion of capital upstream from subsidiaries following strong integration progress, including in further running down NCL, which enabled those entities to release surplus capital on an accelerated time line. Of the total, Credit Suisse International in the U.K. paid up around $4 billion, while around $3 billion was repatriated from the U.S. IHC. The remainder was paid by other foreign subsidiaries around the group.

Collectively, these distributions increased the parent bank's equity by around $2 billion and reduced its investments in subsidiaries by around $6.5 billion, resulting in a $26 billion reduction in risk-weighted assets, driving up its capital ratio.

By year-end, we expect another $3 billion of capital to be returned predominantly from UBS AG's U.K. subsidiaries as we finalize the unwinding of positions in those former Credit Suisse entities. In addition, the U.S. IHC can be expected to repatriate around $2 billion of additional capital by 2028 as it progresses back towards its pre-acquisition CET1 capital ratio.

UBS AG's fourth quarter CET1 capital ratio also reflected an incremental accrual of $1 billion of dividends, bringing the full year 2025 total to $9 billion. As in 2025, the parent bank is expected to upstream half of that total during the first half of 2026 to fund group shareholder returns and has the option to distribute the second half in the latter part of the year, depending on Swiss capital framework developments.

Finally, with dollar-Swiss at around current levels, we expect to continue pacing intercompany dividends to maintain prudent capital buffers and manage FX-driven headwinds on leverage ratios across group entities. As a result, we now expect UBS AG to operate with a stand-alone CET1 capital ratio of around 14% for the foreseeable future, while we still aim to maintain the group equity double leverage ratio near 100%. At the end of 2025, the group equity double leverage ratio was 104%, down 5 percentage points compared to the end of the second quarter.

Turning to our business divisions and starting with Global Wealth Management on Slide 7. For the quarter, GWM delivered pretax profit of $1.6 billion, up from $1.1 billion in the prior year as revenues increased by 11%. Invested assets reached $4.8 trillion. For the full year, GWM generated pretax profits, excluding litigation, of $6.1 billion, up 23% with a cost-income ratio of 75.6%, improving by more than 3 percentage points. All 4 GWM regions grew pretax profits in 2025, with each generating around $1.5 billion, excluding litigation, underscoring the strength and diversification of the world's only truly global wealth manager.

In the Americas, fourth quarter pretax profit increased by 32% with a pretax margin of 13%, up 2 percentage points year-over-year, capping a year in which profits grew by 34%.

EMEA delivered pretax profit growth of 27%, supported by strong transaction-based revenues and ongoing cost discipline, driving a 19% increase for the full year.

Asia Pacific sustained its strong momentum, delivering pretax profit growth of 24% in the quarter and 30% for the full year, its first following completion of the Credit Suisse client migration in 2024, reinforcing the region's significant runway for continued growth.

In Switzerland, pretax profit declined 4% in the quarter amid net interest income headwinds, but increased 2% for the full year on strong growth in non-NII revenue.

Moving to flows for the quarter. Net new assets were $8.5 billion, with $23 billion of inflows across EMEA, APAC and Switzerland, partially offset by outflows of $14 billion in the Americas, primarily reflecting net recruiting-related impacts.

For the full year 2025, we generated net new assets of $101 billion, representing 2.4% growth. We delivered this while absorbing the expected temporary flow headwinds from strategic actions taken to support higher pretax margins and enhance our return on equity.

Net new fee-generating assets were $9 billion, with APAC delivering 10% annualized growth. Mandate penetration was up for the fourth consecutive quarter with our My Way discretionary solution being a strong driver, nearly doubling invested assets year-over-year to over $30 billion.

Net new deposits were broadly flat in the quarter, with an observable mix shift towards non-maturing balances supporting our deposit margin as we look forward. Net new loans were $5 billion as demand strengthened, particularly in Lombard and securities-based lending, supported by lower rates. In the Americas, loan balances grew for the seventh consecutive quarter, demonstrating continued progress in enhancing our banking platform.

Moving to the revenue lines. Recurring net fee income rose 9% to $3.6 billion as fee-generating assets grew to $2.1 trillion. Transaction-based revenues were $1.2 billion, up 20%, driven by strength in structured products and cash equities. Close collaboration between GWM and the Investment Bank remains a key differentiator, enabling us to deliver tailored structured solutions at scale and deepen the value we bring to our wealth clients.

Net interest income was $1.7 billion, up 3% year-on-year and 4% sequentially, reflecting higher average loan and deposit volumes as well as a more favorable deposit mix. For the first quarter, we expect a low single-digit percentage decline in NII as positive loan volume and deposit mix effects are expected to be more than offset by day count and deposit rates.

For the full year, we expect GWM net interest income to increase by low single digits year-over-year, driven by strong loan growth, support from the November liability management exercise and an improved deposit mix, more than offsetting deposit margin compression in lower rate currencies. Underlying operating expenses increased 4% versus the prior year quarter, driven primarily by higher production-linked compensation. Excluding litigation, variable compensation and currency effects, costs declined 2%.

Turning to Personal & Corporate Banking on Slide 8. P&C delivered fourth quarter pretax profit of CHF 543 million, down 5%, primarily due to lower interest rates weighing on net interest income, which declined 10%. This was partly offset by lower credit loss expenses and reduced operating costs. Sequentially, net interest income decreased by 2% as targeted pricing measures largely mitigated the headwinds from Switzerland's 0 rate environment.

Notwithstanding that Swiss franc rates are expected to remain at current levels throughout 2026, P&C's full year NII is modeled to increase by a mid-single-digit percentage in U.S. dollars, supported by FX translation, the liability management exercise and expected loan growth. For the first quarter, we expect NII to remain broadly stable in U.S. dollar terms.

Non-NII revenues were down 3%, with sustained growth in Personal Banking more than offset by lower client activity in the Corporate and Institutional segment. Credit loss expense was CHF 80 million in the quarter and CHF 277 million for the full year. Looking ahead, a mixed credit backdrop in Switzerland, reflecting a more challenging economic outlook is expected to result in quarterly credit loss expense of around CHF 75 million on average. Operating expenses in the quarter were CHF 1.1 billion, down 1%.

Turning to Asset Management on Slide 9. Pretax profit increased by 20% to $268 million, driven by higher revenues and lower costs. The quarter also reflected a loss of $29 million related to the sale of the O'Connor business. Excluding the P&L from disposals, pretax profit was up 41%.

As investments in our growth initiatives and platform scalability continue to take hold, we're seeing the benefits translate into sustained profitability improvement. Net new money in the quarter was positive $8 billion, led by inflows in ETFs, money market strategies and our U.S. SMAs, while invested assets reached $2.1 trillion. Full year net new money was $30 billion, representing a 1.7% growth rate, with flows reflecting product rationalization as Asset Management completed the Credit Suisse integration.

In Unified Global Alternatives, net new client commitments were $9 billion, including $8 billion from GWM clients with funded invested assets now at $330 billion. Overall revenues rose 4%, driven by an 11% increase in net management fees on higher assets under management. Operating expenses declined 2%, resulting in a 66% cost-income ratio.

On to Slide 10 and the Investment Bank. Pretax profit of $703 million, increased 56%, driven by 13% higher revenues. This performance capped the IB's strongest top line year on record, delivering $11.8 billion of revenue, up 18%. We achieved this result with essentially no incremental RWA, reflecting disciplined risk management and highly capital-efficient growth. For the full year, the IB's return on attributed equity was 15%.

Banking revenues rose by 2% in the quarter to $687 million. Advisory grew by 2%, driven by strong performance in Switzerland and across our broader EMEA franchise. Capital Markets increased 1%, powered by ECM, which was up 68% and outperformed fee pools across all regions.

We held leading roles on several transactions during the quarter, highlighting the benefits of our targeted investments in strategic sectors and products. Revenues were lower in LCM, reflecting softer sponsor activity across our client base.

Moving to Global Markets. Revenues increased by 17% to $2.2 billion as we delivered our strongest fourth quarter performance on record, both globally and in every region. Equities rose 9% versus an exceptionally strong prior year quarter, driven by prime brokerage, cash equities on record market share and equity derivatives. FRC revenues increased by 46%, with FX and precious metals in particular, standing out.

Our continued technology investment, combined with a highly regionally diversified platform and deep connectivity with Global Wealth Management, continues to differentiate our markets business, supporting strong client engagement and sustained momentum. Against this strong revenue performance, operating expenses increased by 6%.

On Slide 11, non-core and legacy generated a pretax loss of $224 million in the quarter. Revenues were negative $10 million as funding costs of $86 million were partly offset by net revenues from position marks and disposals. Operating expenses were down by nearly 60% year-on-year, reflecting the significant progress we're making in exiting costs from the platform.

Risk-weighted assets at quarter end were $29 billion or $5 billion, excluding operational risk RWAs, down $2 billion sequentially. LRD decreased by $6 billion or 25% quarter-on-quarter, ending the year at $19 billion.

Moving to a short recap on our full year group performance on Slide 12. We delivered net profit of $7.8 billion, up 53% year-over-year with an underlying return on CET1 capital of 13.7%. Excluding litigation and applying a normalized tax rate, our return on CET1 capital was 11.5%. Revenues grew 8% in our core businesses and 4% overall, while costs were 2% lower as we continue to progress toward completing the Credit Suisse integration.

As we look at our full year performance through a regional lens on Slide 13, the contributions across the group underscore the strength of our globally diversified model and unrivaled global connectivity. Outside of Switzerland, our anchor and most profitable region, which delivered over $5 billion in pretax profit, each region delivered strong profitability and grew at a double-digit rate year-over-year. APAC and EMEA were up over 40% with the Americas 14% higher, clear evidence that our scale, reach and disciplined integration are building a more balanced earnings profile that positions us well to perform through the cycle and to capitalize on growth opportunities where they're strongest.

With that, I hand over to Sergio for the investor update.

Thank you, Todd, and welcome, everybody. 2025 was a year marked by exceptional dedication from our colleagues as we advanced in our journey to position UBS for sustainable long-term success. We achieved excellent financial results and made great progress on the first integration of 2 G-SIBs, for sure, one of the most complex integrations in banking history.

We did this despite an unpredictable market backdrop and amid regulatory uncertainty in Switzerland while never losing sight of what matter most, serving our clients. As a result, we captured growth across our asset-gathering platform, supported robust private and institutional client activity and increased market share in our areas of strategic focus in the Investment Bank.

In Switzerland, clients relied on UBS for their domestic needs and our global capabilities and expertise. During the year, we also extended or renewed around CHF 80 billion of loans to businesses and households, reinforcing our commitment to act as a reliable partner for the Swiss economy.

At the same time, we substantially completed the client migration in Personal & Corporate Banking, and we are set to finish the remaining transfers for Swiss book clients by the end of the first quarter. With this, alongside further progress in simplifying our operations, we are on track to substantially finalize the integration by the end of the year and reach our 2026 group exit rate targets.

Our performance throughout the year further fortifies our capital strength and our ability to follow through on our capital return plans. As Todd mentioned, we are honoring our capital return commitments with an increase in our dividend. This was complemented by our share repurchases, which we plan to replicate in 2026.

Our momentum is also enabling our strategic investments to support our clients, reinforce our technology and position UBS for long-term growth. At the same time, we are seeing increasingly strong adoption of AI across the firm, supported by our rollout of next-generation tools and platforms to improve efficiency and productivity. We entered 2026 from a position of strength and are committed to executing on our proven strategy to generate sustainably higher returns and long-term value for all stakeholders.

I'm pleased by the integration progress we have made to date, and I am confident in our ability to substantially complete the integration and capture the remaining synergies by the end of the year. But the final wave of the Swiss book client migration has the highest level of complexity and is a key dependency to fully winding down the legacy infrastructure through the end of the year. Therefore, we cannot be complacent and have to maintain the same level of focus and intensity as we approach the last mile.

In the planning process for 2026, we identified an additional $500 million in cost synergies. This allow us to increase our gross cost savings ambition to $13.5 billion. I'm particularly pleased that we will be able to produce these synergies at a very efficient cost to achieve multiple of 1.1.

Each step we take towards completing the integration brings us closer to our 2026 exit rate targets for the group. While we are on track to reach a 15% underlying return on CET1 capital and a cost-income ratio below 70% by the end of the year, this slide underscores the efforts that are still required to get there.

As we entered the first quarter, the macroeconomic backdrop continues to support steady global growth and easing inflation. Market conditions remain largely constructive with broader equity dispersion and rotation supporting client engagement as well as healthy transactional and capital markets activity and pipeline.

Demand remains focused on geographic and asset class diversification as well as principal protection. However, continued elevated geopolitical and economic policy uncertainties mean sentiment and positioning can shift quickly, leading to spikes in volatility influencing institutional and corporate client activity levels. So across all of our businesses, helping our clients navigate these challenges and sustaining client momentum is still our #1 priority.

While we are about to finish the integration, our strategy for delivering long-term value remains unchanged. We are fully committed to our global diversified model. Our weighting towards our asset-gathering franchises provide us with an attractive business mix that sets us apart from our competitors.

And while our leadership in the largest and fastest-growing markets is fundamental to serving our clients, it also provides significant diversification benefits, which underpin our ability to deliver attractive and stable profits through the cycle. Fortified by a balance sheet for all season and a disciplined approach to risk and cost management, it is clear that our strategy reinforces UBS' role as a stabilizing force for our stakeholders and for the Swiss economy.

Our global client franchises also provide us with a competitive advantage that cannot easily be replicated. We are the world's only truly global wealth manager and the #1 Swiss universal bank with leading global capabilities across our Asset Management franchise and our competitive capital-light investment bank.

While our business divisions are strong on their own, it is the intense partnership between them that creates truly differentiated value for clients and stakeholders. This is why further reinforcing collaboration across the group must continue to be one of our key levers for sustainable growth.

With the integration nearly done, it is now important for us to apply a one bank approach to our entire operation. To do this, we are redesigning front-to-back processes and accelerating investments in technology and AI. Building on these strong foundations, we are investing in a portfolio of large-scale transformational AI programs designed to increase our operational resilience, enhance the client experience and unlock higher levels of efficiency and effectiveness across the organization.

In addition to the levers within our control, the secular trends shaping the industry support our long-term growth ambitions and our ability to serve our clients. More than ever before, rapidly evolving geopolitical, societal and demographic dynamics are influencing where people choose to leave. These trends are also accelerating the pace of wealth migration and changing how clients invest and manage risk across public, private and alternative markets. In addition, longer life expectancies and intergenerational wealth transfers are extending investment horizons and increasing demand for holistic wealth planning.

Meanwhile, the next generation of investors expect a seamless technological experience and the emergence of digital assets and tokenization is creating opportunities to fundamentally change how we operate. In this context, clients will increasingly place an even higher premium on trusted advice from partners who can offer true global connectivity, access to innovative products and seamless cross-border solutions. UBS is uniquely positioned to convert these trends into stronger profitability and long-term value creation. These trends are also reflected in our 2028 ambitions for all our business divisions.

Let's start with Global Wealth Management, where we are on track to realize the final integration-related synergies to increase efficiency and capacity for investments and support the next level of profitability and growth. We will leverage our global reach, regional expertise and strong connectivity with Personal & Corporate Banking, Asset Management and Investment Bank to deepen client relationships and maintain momentum.

In addition, a key priority is to scale and expand our high net worth franchise. To achieve that, we are investing in next-generation digital capabilities that strengthen our products and services while also improving adviser productivity and pretax margins.

By 2028, we expect all of our regions to increase their profitability, supporting Global Wealth Management's ambition to achieve a reported cost-income ratio of around 68%. As we begin to fully capitalize on the benefits of our greater scale and capabilities, we aim to deliver more than $200 billion in net new assets per annum by 2028. In 2026, we expect GWM's net new assets to exceed $125 billion as we capture the benefits of our leadership and momentum across APAC, EMEA, Switzerland and Latin America.

In the U.S., our strategic actions to improve operating leverage are resulting in anticipated temporary headwinds, but we expect net new assets in the Americas to be positive in 2026, supported by healthy recruiting pipeline and improved retention of our most productive advisers.

On this slide, you can see our unique and diversified positioning coming through across all of our regions, with each being a meaningful driver of growth and equally contributing to GWM's profitability. Together, they form the basis for our unrivaled global scale, which adds to our local capabilities.

In APAC, our strong growth and profitability reflects our status as the largest wealth manager in the world's fastest-growing market. Building on this, we are reinforcing our strongholds in Singapore and Hong Kong, while increasing our scale in key growth markets in Southeast Asia, Taiwan, Japan, India and Australia.

Across the region, we aim to expand share of wallet, accelerate strategic partnerships, build on our feeder channels and hire more client advisers. Our leadership in EMEA is driven by our highly profitable international platform that offers cross-border services through our Swiss Booking Center. This expanded offering in the region is reasoning with our clients, particularly in the Middle East, where our franchise has nearly doubled in size compared to its pre-acquisition position.

Complemented by our growing onshore franchises, EMEA is poised to capture growth and further amplify our global diversification. Switzerland is a unique source of stability for our Wealth Management franchise, supported by deep client relationships and our home country's role as a destination for international clients. Once the Swiss book clients migrations are completed later this quarter, our adviser will be in a superior position to focus on capturing enhanced growth.

A year ago, we outlined our multiyear plan to improve the sustainable performance of our U.S. wealth business and positioning it to grow. A 3 percentage point improvement in pretax margins in 2025 demonstrates that we are making good progress against that plan.

Simplifying access to the Investment Bank has been a clear differentiator for our clients, contributing to greater client activity as we further extend our specialized advisory and capital market solutions to our wealthiest clients and family offices. Meanwhile, investments to enhance our coverage model across our client segments are streamlining the distribution of tailored products, enhancing the client experience and improving financial adviser productivity.

Moving forward, the most significant source of our margin expansion is our core banking offering. We have healthy momentum today, supported by 7 consecutive quarters of loan growth. And the conditional approval of a national charter gives us a clear path to further expand our banking platform and product suite to support our ability to further reduce our profitability gap to peers.

Our operational momentum and strategic progress in 2025 allow us to bring forward our ambition by a year, and we are now targeting a pretax margin of around 15% in 2026. We will then look to achieve a PBT margin of around 16% in 2027 before building to around 18% in 2028. The Americas, including our U.S. franchise, is a cornerstone of our capital-generative business model and wealth management franchise, and we will continue to invest to reinforce our position.

Let's now turn to Personal & Corporate Banking, which underpins our status as the leading Swiss universal bank and reliable provider of credit for the Swiss economy. P&C's performance in 2025 reflects our commitment to stay close to clients while executing one of the industry's most complex client account migrations ever, with minimal disruption and limited asset outflows.

With this major milestone soon behind us, P&C is well positioned to benefit from a single operating platform, freeing up time and resources to serve clients. Just as importantly, winding down legacy infrastructure will unlock material cost synergies to improve profitability while creating additional capacity to reinvest.

The power of our fully integrated offering in Switzerland, combined with our global reach, allowed us to retain more corporate and institutional clients from Credit Suisse than we had expected as we optimized our financial resources.

Now we will continue to improve offering to reinforce our standing as the bank of choice for clients and drive growth. We are strengthening our digital leadership by increasing personalization as we roll out selective AI-enabled capabilities to streamline service and bolster productivity.

Meanwhile, as digital assets become a more relevant part of the financial system, we are taking a focused client-led approach. We are building out the core infrastructure and exploring targeted offerings from crypto access for individual clients to tokenized deposit solutions for corporates.

In terms of our financial ambitions, it is likely that the Swiss franc interest rate headwinds that have persisted since 2024 will delay the achievement of an underlying cost-income ratio below 50% by the end of 2026. Despite this, we are -- we still expect the enhanced scale of the franchise and improving operating leverage to translate into double-digit pretax profit growth this year. For this reason, we also aim to achieve a reported cost-income ratio around 48% for 2028, even if rates remain at 0.

In Asset Management, we have seen a significant improvement in operating leverage alongside the substantial completion of our integration priorities. This allowed us to meet our 2026 exit rate ambition a year ahead of schedule. With better strategic positioning and a sharper product offering, Asset Management is well positioned to capture efficient growth through its differentiated capabilities, that includes alternatives, where $330 billion in invested assets in our Unified Global Alternatives unit makes us a top 5 limited partner with the critical scale necessary to provide our clients with access to innovative investment opportunities across private markets, hedge funds and real estate.

We also have deep traction across our ETF and index offering, our credit investments group and our separately managed accounts capabilities developed in partnership with GWM. We intend to build on these areas of strength with an ambition to realize around 3% net new money growth through the cycle. Through a combination of growth, continued cost discipline and the rationalization of our platform, we are targeting a reported cost-income ratio of around 65% by 2028.

Turning to the Investment Bank. We are capitalizing on investments in our areas of strategic importance to enhance our client offering and deliver sustainable returns. In 2025, Global Markets had record revenues, while Global Banking continued to benefit from the steadily improving market share since the acquisition.

Our performance throughout the year also highlights the benefits of our diversified platform with leading franchises across APAC, EMEA and Switzerland, complemented by a strengthened presence in the Americas. Looking ahead, we expect Global Markets to continue to perform well in the current market environment, supported by enhanced market share in equities, FX and precious metals and by taking advantage of our reinforced global research capabilities.

In Global Banking, our strengthened coverage and product teams are adding to an already healthy pipeline, providing us with momentum as 2026 gets underway. Assuming supportive markets, we still aim to double Global Banking revenues by the end of this year on an annualized basis compared to our 2022 baseline. At the same time, we will continue to build on our connectivity to GWM, P&C and Asset Management to support growth across the group and generate a 15% reported return on attributed equity through the cycle. And it will continue to consume no more than 25% of the group's risk-weighted assets.

The consistent execution of our capital-generative strategy and our financial resource optimization efforts over the last 2 years have brought revenues over risk-weighted assets much closer to pre-acquisition levels. This gives us confidence that we are embedded -- that we have embedded the necessary capital discipline across our combined business and is more of a proof of our integration progress. Importantly, we can now fully focus on deploying capital towards accretive growth opportunities while following through on our capital return objectives.

After repurchasing $3 billion of shares in 2025, we intend to buy back another $3 billion in 2026 with an aim to do more. The amount will be subject to our financial performance, maintaining a CET1 capital ratio of around 14% and further clarity on the future regulatory regime in Switzerland. We expect to hear more on this later in the first half.

Beyond 2026, we do not expect any change to our capital return policy. We intend to continue to pursue a progressive dividend. This will be complemented by a share buyback program that will be calibrated based on our financial results and the final outcome and timing of implementation of the new regulatory regime in Switzerland.

Once our restructuring work is behind us, we will be able to harvest the full benefits of the acquisition and produce sustainably higher returns. Our progress over the last 2 years and our expected profitability in 2026 will allow us to build towards our ambition to restore and surpass pre-acquisition levels of profitability. For 2028, we aim to deliver a reported return on CET1 capital of around 18% under the current capital framework and a reported cost-income ratio of around 67%.

A lot of hard work still lies ahead of us, but I'm more than confident than ever in our ability to create significant value for all our clients, our people, our shareholders and the communities where we live and work.

With that, I hand back to Todd for more details on the plan.

Thank you, Sergio. Bringing together the achievements and ambitions highlighted so far, Slide 30 sets out the path as we work towards our 2026 exit rate targets of an underlying return on CET1 capital of around 15% and an underlying cost-income ratio below 70%. Underpinning this plan is our expectation that on an overall basis, our core franchises will be the primary contributor to year-on-year pretax growth and return accretion. Building on the enhanced scale, capabilities and competitive positioning we've already achieved, we expect broad-based revenue momentum in Global Wealth Management, the Investment Bank and Asset Management to more than offset net interest income headwinds in Personal & Corporate Banking.

Critical to our return accretion, the imminent completion of client account migration in our Swiss Booking Center is set to unlock more meaningful cost reductions as we retire legacy infrastructure and create additional staff capacity, particularly benefiting our Global Wealth and Swiss franchises.

In non-core and legacy, we expect the continued rundown of costs during 2026 to further reduce the drag on returns. By year-end, the cost run rate is expected to be better sized to the limited residual portfolio, underscoring the further progress we intend in taking down this legacy cost base.

On capital, having already lifted revenues over RWAs to our 10% ambition and with capital efficiency embedded in how we allocate resources across the group, we're well positioned to selectively deploy incremental resources to capture attractive growth opportunities while maintaining our RWA productivity. Accordingly, we expect disciplined capital deployment to underpin overall return accretion.

Our 2025 effective tax rate was well below our structural level, reflecting material net litigation reserve releases in non-core and legacy and tax planning linked to the optimization of our legal entity structure.

Assuming no material reserve movements going forward and with a less meaningful drag from NCL, we expect our effective tax rate to normalize in 2026 to around 23% for the full year. Taken together, these factors are expected to translate to an underlying return on CET1 capital of approximately 13% and a cost-income ratio of around 73% for the full year 2026.

As we've highlighted in the past, all of 2026 is required to deliver the remaining integration milestones, with net saves expected to build progressively and a greater proportion weighted to the second half. This is why we focus on exit rate targets. By the end of this year, with integration execution substantially complete, the remaining synergies largely captured and the run rate benefit of the net savings embedded in our cost base, we expect an annualized view of our normalized run rate of underlying OpEx to provide an appropriate basis for the cost-income ratio that we aim to deliver from that point forward.

Turning to costs on Slide 31. As of year-end, we've delivered $10.7 billion of cumulative gross run rate cost saves, including $3.2 billion in 2025. Compared to our 2022 baseline, this has reduced our cost base by around 25%, excluding currency effects, litigation and variable compensation linked to production and by around 12% on an overall basis.

Building on this progress and through the execution of our integration road map, we identified during our planning process around $500 million of incremental gross cost saves to be delivered by the end of 2026, taking the planned total to approximately $13.5 billion. These incremental savings are enabled by our simplification agenda in addition to the decommissioning work underway and help shape our post-integration operating model, creating capacity to invest in technology and talent for future growth while supporting the delivery of our exit rate targets.

Of the residual $2.8 billion of gross cost reduction targeted for this year, around 40% is expected to come from technology infrastructure and run costs, 40% from workforce capacity and the remainder from third-party spend and real estate. The biggest driver is retiring the Credit Suisse platform in Switzerland, which in turn enables the phaseout of associated middle and back-office systems. With client migrations in the Swiss Booking Center running through the end of the first quarter, the most complex decommissioning work ramps up from midyear, driving more meaningful net savings realization from that point onward.

Turning to cost to achieve. The $13 billion of integration-related expenses incurred to date reflects both the scale of execution delivered so far and the additional efficiency opportunities unlocked as we progressed, supporting incremental savings and faster benefit capture.

For 2026, we expect around $2 billion of additional integration-related expenses to deliver on our cost-saving ambition. This amount reflects continued execution intensity and targeted investment to deliver incremental savings alongside the remaining integration synergies. Notably, the cost to achieve multiple remains unchanged at 1.1x, underscoring continued discipline and cost control through this highly complex integration. As a result, we now expect final cumulative integration-related expenses to be around $15 billion at historical FX by the end of 2026.

A further important driver of the cost synergies underpinning our plan to deliver our exit rate cost-to-income ratio target is the continued cost reduction in non-core and legacy, as shown on Slide 32. Since its formation following the acquisition, NCL has reduced its RWAs by 2/3, freeing up nearly $8 billion of capital and has cut operating costs by roughly 80%.

We've also exited the costliest debt inherited from Credit Suisse and resolved several of the most complex legacy litigation matters. With the vast majority of the balance sheet rundown now behind us, the team is squarely focused on driving further cost efficiencies. As a result, we expect to exit 2026 with annualized operating expenses, excluding litigation, of approximately $500 million, around 40% of 2025 levels and annualized net funding costs of less than $200 million, reflecting savings from November's liability management exercise. We then see the resulting pretax loss run rate halving again by 2028 and tapering to immaterial levels thereafter. We also expect NCL to exit 2026 with around $28 billion of RWAs, consisting of $4 billion of market and credit risk and $24 billion of operational risk.

On op risk, we recently updated our runoff projections as part of our annual review. Legacy provisions and settlements reflecting last year's significant progress in resolving inherited legal matters broadly offset other roll-offs. So our year-end 2025 balance and our expected 2026 balance remain broadly unchanged at around $24 billion.

Looking forward and reflecting our regulators' instructions, we continue to include certain discontinued businesses in the 10-year loss history and do not assume any accelerated releases. Under these assumptions, roughly 10% of the current balance rolls off through 2030, with the remainder substantially running off between 2031 and 2035.

Staying with risk-weighted assets and capital efficiency on Slide 33. As the slide illustrates, we've made meaningful progress in lifting our revenues over RWAs back to our ambition level of around 10% from less than 8% just 2 years ago. This principally reflects 3 drivers: First, strong progress in running down NCL, reducing RWAs and freeing up capacity; second, disciplined balance sheet optimization across our core businesses since the acquisition, ensuring we earn appropriate returns for the risk deployed; and third, stronger underlying performance, particularly in 2025, where we monetize the value of our enhanced scale, capabilities and competitive positioning to translate constructive markets into meaningful revenue growth and share gains with a greater proportion of the uplift coming from the more capital-light parts of the franchise.

On that stronger footing and with capital efficiency embedded in how we allocate resources across the group, we're well positioned to selectively deploy incremental balance sheet to support profitable revenue growth across our core businesses. Specifically, as our focus shifts from restoring capital discipline to enabling the next phase of growth, we are no longer guiding to an RWA target. Rather, we expect our risk-weighted assets trajectory to be a function of our growth ambitions and disciplined execution as we drive higher returns while maintaining a strong capital position and retaining the RWA productivity we've restored since the acquisition.

I should note that we're driving this capital efficiency and productivity while absorbing RWA headwinds from the final Basel III implementation in Switzerland, which has had a cumulative net impact of adding around $60 billion of RWAs since we started preparing for its adoption over the last several years.

In addition, we're preparing for the phase-in of the Basel III output floor, and we continue to work to mitigate its impact through actions such as improving data quality and pursuing external ratings for relevant counterparties and business areas. Based on our current estimates, the effect should remain modest, no impact in 2026, potentially up to 1% in 2027 and around 2% in 2028 when the output floor reaches its fully phased level of 72.5% of standardized RWAs.

Adding to this, the current Swiss application of an internal loss multiplier is driving materially higher operational risk RWAs than we would expect under the corresponding implementations in the U.K., the EU and the U.S., where authorities are expected to set the ILM at 1. In that case, op risk RWAs would be driven by the revenue-based business indicator alone, which for us would mean $40 billion lower risk-weighted assets.

Turning to capital on Slide 34. As of year-end, our group total loss absorbing capacity stood at $187 billion with a going concern capital ratio of 18.5%. As already highlighted, our group CET1 capital ratio was 14.4% and reflected a $3 billion reserve for planned share repurchases in 2026. Looking ahead, we continue to target a CET1 capital ratio of around 14%, giving us a robust buffer above regulatory minimums and the capacity to both self-fund growth and deliver attractive capital returns.

This said, as Sergio mentioned, it's our intention to continue to buy back shares beyond 2026. While it's premature to comment on the absolute level of future repurchases, we may begin accruing later this year for a portion of the 2027 share buyback. The timing and pace of any accrual will depend on our financial performance, developments in the Swiss capital framework and our ability to operate at our CET1 capital ratio target of around 14%. As we await the final capital ordinance expected later this half, our CET1 capital ratio may therefore temporarily sit above our target level.

On to AT1s. With approximately $13 billion of issuance since the acquisition, our AT1s reached 4% of RWAs at year-end against a current regulatory allowance of 4.4%. For 2026, having already placed $3 billion of our targeted $3.5 billion of AT1 issuance in January, we're well advanced on our AT1 funding plan for the year. We'll continue to stay close to the market and where it makes sense, bring our issuances forward.

In terms of gone concern capital, we closed the year with $90 billion of TLAC eligible debt. Looking ahead to 2026, as we continue to optimize our gone concern capital stack, we target approximately $11 billion of holdco issuances against around $20 billion of expected maturities, redemptions and first calls.

Since the start of the integration, disciplined execution of our funding strategy has generated around $1.2 billion in net funding cost savings, exceeding our original 2026 target of $1 billion. Just as importantly, we've strengthened the quality and composition of our liability profile, reinforcing our balance sheet for all seasons and positioning us well to fund growth through the cycle.

To conclude on Page 35, the strategic financial and operational improvements we delivered during the past year reinforce our confidence in achieving our 2026 exit rate targets and give us a clear line of sight into the drivers of performance that support our financial ambitions beyond the conclusion of the integration.

With that, let's open up for questions.

[Operator Instructions] The first question comes from the line of Chris Hallam from Goldman Sachs.

So Todd, you talked at the start of the call about the $9 billion of capital you've been able to upstream from the subsidiaries and that $26 billion drop in RWAs at the parent bank. And then I guess there's more that you plan to do. So if we were to rerun the math that got us to the $24 billion foreign sub capital shortfall earlier in the year, is it fair to say that number today would be lower? And can you give us a sense sort of by how much lower and how much repatriation rebalancing you can still do to work that number lower from here?

And then second question, which is more broadly, I guess, on the group. You've got the 13% RoCET1 guide for this year. Jan 1, there was a strong narrative across the street on the potential for better capital markets activity levels this year, effectively a bit of a Goldilocks operating environment. Now the backdrop appears more volatile. So if we spend much of 2026 with this current market backdrop, elevated volatility, dollar weakness, more questions around public and private market valuation levels, how would that impact your -- the group across your various businesses? How resilient would the 13% target be in that context? And I guess anything you want to think about in terms of the banking target, '26 versus '22? And just on that target, is that now run rate, because I think it used to be double '22 and '26 and now it's on an annualized basis. So I'm just checking if that's shifted to an exit run rate guide as well.

Chris, thanks for the question. So on the first one, yes, it's fair to say that if you rerun the numbers that the uptick from 1Q '25 or indeed 2Q '25 would be lower for this. But naturally, as we've said, we always had every intention to upstream this capital. It's important to reiterate that this capital that we've been repatriating from the Credit Suisse subs was always part of our planning.

Our strong progress in derisking the entities, as I mentioned, has in these cases, just simply accelerated the return of the capital. We've always assumed we would get it. It's always been formed part of our planning. It's also been assumed to be upstreamed and informed what we told you a year ago in bringing our equity double leverage ratio to pre-Credit Suisse acquisition levels to around 100%. So that hasn't changed.

What has changed, obviously, is the pace at which the cash has come up to the parent bank, one; and two, the fact that, as we've mentioned, FX-driven headwinds on the Tier 1 leverage ratios of several group entities, including UBS AG consolidated forces us to pay intercompany dividends, including at the UBS AG level and as a result, limits how much capital in the very near term we can upstream to group. But certainly, mathematically, your inference is correct.

In terms of the current environment, yes, I mean, we certainly recognize and in our outlook statement talking about 2026, recognize that we entered the quarter with constructive markets continuing, still seeing higher dispersion and lower correlation in markets that informed constructive 2-way trading in our IB and still our wealth clients remaining risk on despite the need to continue to diversify across asset classes and geography. Of course, as volatility, as we've said, event-driven volatility from various things, whether it be geopolitics or some of what we've been seeing recently, naturally suggests that things can turn quickly. So we're focused just on what we can control, and the ambitions and targets we've laid out reflect that.

On the banking target, I think it's fair to say that we remain confident in our ability to continue to scale up what you and I have discussed many times in terms of doubling the 2022 revenues in '26. Sergio made the comment in his prepared remarks. It's fair to say that the front half of 2025 for banking, in particular, where we're indexed in some of the markets and with ECM only picking up later in 2025, effectively delayed us a bit. And as a result, Sergio and I are talking about getting there in 2026 on an annualized basis.

The next question comes from the line of Kian Abouhossein from JPMorgan.

I mean the first one is just coming back to U.S. Wealth Management and maybe just bottom up a little bit around the restructuring of the adviser side. When should we expect adviser attrition to end? And how should we think about net flows as we progress through 2026?

And in that context, clearly, your pretax margin gives some indication of what will drive that. I recall Peter Wuffli talking about ultra-high net worth and family office growth in the U.S. And I'm just trying to understand what is the difficulty in the U.S. to enter that market because it seems to be extremely difficult to gain market share, especially multifamily -- in family office, sorry.

And lastly, Sergio, you discussed a little bit tokenized assets. And you guys are quite advanced in this field based on what we research. And I'm just trying to understand what the long-term strategy is. Because on the one hand, you could argue Wealth Management, one advantage is you get access to all these products being a Wealth Management client and through tokenization, you kind of commoditize that. So I'm just trying to understand how you think about the impact of tokenization, in particular, of assets on your wealth business long term.

Kian, let me address the first question on U.S. wealth. So first, I would say, we're very pleased with our positioning as we continue to work through the levers that we've discussed. We're particularly happy with our positioning at the high end of the market. I think that's where we have a stronghold. What we're trying to do is leverage that and also work on greater penetration in all aspects of high net worth, but we're happy with our position, especially at the top end.

We're certainly not satisfied with the net movement we've seen around our advisers. But as Sergio said, it's a transition-related issue. And it's part of the changes that we introduced a year ago that we considered necessary to improve pretax margin and inform sustainable profitable growth.

Now on -- in terms of how we see this playing out, asset inflows or outflows from adviser hires or exits, as I've said in the past, do occur several months after announcement. So we can model the impacts on NNA based on announced net recruiting data. And on that basis, we do expect further NNA headwinds through the first half of 2026, after which we expect net recruiting outflow impacts to materially taper. And as Sergio said, for the U.S. business to be a positive contributor to GWM net flows in 2026 overall.

And what gives us confidence around this is our building recruiting pipeline as well as the feedback we're getting across the field where advisers are telling us that the changes that we've introduced reinforce the strength of our platform and make UBS the best place for FAs to serve their clients and grow their businesses.

So Kian, on tokenized assets, I think it's fair to say that, yes, we are really pursuing a strategy of being a fast follower in that area. So in respect of really looking for solutions for personal clients or wealthy clients or corporates. But when you look down at how we're going to do it, first of all, I think like AI, this, of course, may have some cannibalization effect on the services you do. But I would not underestimate the impact on the cost to serve on this technology.

So while we see maybe pressure on the top line, the advantages coming from the rationalization of the processes, the back office, the operations will be substantial. So I'm not so concerned about that kind of threat. By the way, also recognizing that as a highly regulated bank, we cannot be a frontrunner in terms of implementing and deploying this kind of technology, but we need to take a very prudent approach.

So I see tokenization as a journey like for AI that will play out over the next 3 to 5 years and which will be complementary to our more traditional existing businesses. And by the way, where knowledge is going to be important, technology is important. And last but not least, when we talk about Wealth Management and wealthy clients and wealth planning in general, the emotional part of the equation, having the client proximity, the human touch will continue to be a critical factor to differentiate yourselves.

The next question comes from the line of Antonio Reale from Bank of America.

It's Antonio from Bank of America. I have 2 questions, please. The first one on net new assets. I mean, can you help us better understand the path to your ambition of reaching more than $200 billion net new assets by 2028? And maybe give us some more color around sort of the key regions. It would be great if you could talk specifically about the trends and remind us of the initiatives you're taking to capture some of the tailwinds that I'm thinking in Asia Pacific on both wealth creation and capital market activity. I mean, we've seen the pipeline of IPO in China and Hong Kong looking very, very strong. So that would be my first question.

My second one is on costs. You've talked about the delivery of cost synergies and the efforts are clearly visible with almost the entire organization working on that delivery. Can you talk us through a little bit more on sort of your expectations for net cost savings from here on? I mean, I've heard your remarks and seen your targets. But if you could give us a sense of how much of these savings are reinvested in the business, IT, AI capabilities or SA retention? And how much can be the sort of net cost savings coming through?

Antonio, so let's make -- let's step back on the first question and maybe provide some context to help unpack it. So on the path to $200 billion, it's important to remember that we guided to $100 billion in 2024 and 2025 because we flagged that there are a number of headwinds that we have to work through around this unprecedented integration, and that's going to create some offset to NNA or some of the strategic actions we're taking to drive pretax margins and return on equity was going to come at the expense of flows. And indeed, that's played out over the course of '24 and '25.

So what gives us confidence in terms of the build is the fact that we've worked through many of these headwinds we just talked about in response to Kian's question on flows in the U.S. still remain a headwind into 2026. But outside the U.S., a lot of the things that I spent time over the last several quarters discussing in terms of headwinds that we have to navigate through, we have done. So that gives us effectively confidence to believe that just working through those headwinds themselves is a boon to NNA growth.

In terms of specific things that we want to do, we want to continue to capture wallet across the board with our best-in-breed CIO solution shelf and leverage our unrivaled global connectivity at a time when wealth is increasingly mobile, as Sergio described in his comments earlier. We continue to see signs of the IPO recovery, which is supportive of net new assets. We're also regaining the front foot on strategic recruiting, and we could see that coming through, and that's part of, for sure, what we're doing in APAC and driving growth there.

And in addition, we're very focused on net new client acquisition in the context of wealth transfer as well. So these are things that we're doing outside the U.S. also, of course, building out our more digitized offering into high net worth will help. So I think it gives you a sense of where we expect to grow. It's going to be across our franchise. Naturally, as we said, the U.S. will -- is expected to be a net positive contributor in '26, but we know in '27 and '28, the U.S. has to contribute more in order to grow to greater than $200 billion. And so that's part of the plan as well.

On costs, I think it's fair to say that you asked just to get a little bit more insight on the saves. So first, in terms of the path to the $13.5 billion, we have $2.8 billion of gross cost saves to deliver through 2026. As I mentioned in my comments, it's about 40% on the tech side, about 40% personnel related and 20% third-party spend and real estate. Once the gross cost saves are achieved, we expect that gross to net ratio to fall in line with where we have been guiding in prior quarters. If I look at my gross to net in terms of what I plan for the end of 2026 on the $13.5 billion, I intend to deliver net saves of around 75% of that amount, excluding variable and FA comp, anything that -- any headwind from that and effectively is excluded, but it's a 75% gross to net cost capture in how we think about getting to our end of 2026 targets.

The next question comes from the line of Giulia Miotto from Morgan Stanley.

The first one, Todd, I want to check if I understood you correctly. I think you said that half of the $9 billion accrued between parent and group could be distributed in the second half of the year subject to bid to save the proposal. I just want to understand what outcome could drive essentially a $4 billion additional buyback in the year, if I understood this correctly.

And then secondly, on the parent bank, I think you said you intend now to run around 14% CET1 there because of FX headwinds. Do you disclose anywhere any sensitivity in terms of what we can expect the FX impact to be on this ratio going forward in case the CHF appreciates further. And I know you disclosed the sensitivities at group level, the 14 basis points impact for 10% depreciation of the dollar, but I was just interested in looking at the parent more closely.

So on the $9 billion accrual at the parent bank with respect to its dividend to pay up to group, we said that like last year, we were going to split it in 2. So we're imminently paying up half of that or $4.5 billion to the holding company. The other $4.5 billion, we're just taking a prudent wait and see to see what happens in terms of the Swiss regulatory capital framework developments like we had last year, just retaining that optionality to either retain or to pay up. And so that's the way we've done the split again in respect of the 2025 dividend accrual of the parent bank up to the holding company.

In terms of the -- you mentioned the CET1. You're looking for the sensi, the FX sensi. So first, I would just tell you that, in general, maybe to step back a bit that the dollar softness that we've seen in the -- also in the first part of this year, given the currency mix of our businesses and balance sheet is moderately supportive of pretax profit accretion. So that's across the group while offering a moderate headwind on our capital ratios. So just a sensi, as you know, across group is a further 10% drop in the dollar versus other currencies would drive a 3% PBT accretion while placing low double-digit basis point headwind on our capital and leverage ratios. At the AG consolidated level, the sensitivity is, by and large, very similar to the group. So while we don't disclose it, you can take away that the FX sensi at the AG consolidated level behaves in a very similar way.

The next question comes from the line of Jeremy Sigee from BNP.

Just one question on the capital. You mentioned the ordinance measures you expect publication later in the first half, which I think is what had been planned. Do you have any clarification on when the go-live date for that aspect and particularly the phase-in which I know we've talked about before. I just wondered if there's any clarification on your expectations for that on the ordinance measures, specifically what the phase-in would be?

And then my other question really was on, just if you could talk a bit more about Asia Wealth Management flows, which were a bit soft in the quarter. I just wondered if there was any giveback from the strong flows you had last quarter and sort of how you see the outlook for Wealth Management flows in Asia going forward?

Jeremy, so let me take your 2 questions. So the first, when the ordinance is published, the Federal Council will have to confirm then what the effective date is and the phase-in. So I think it's reasonable, as we've said before, to expect a phase-in, and it's reasonable to expect a prospective application date or effective date just given historical practice, but that will have to be confirmed by the Swiss Federal Council when they publish the ordinance later in the first half.

In terms of Asia flows, look, we're very happy and very comfortable with the position Asia is in from a flow standpoint, in particular, of course, moreover around their ability to generate profitable growth. As I mentioned in my comments, I believe the power of the integrated franchise, which this is their first full year since the client account migration at the end of 2024 is clearly contributing to growth and profitability overall.

And as I mentioned in response to an earlier question from Antonio, our focus is on growing assets across the region by doing things like deepening share of wallet, accelerating strategic partnerships, as Sergio mentioned, strengthening high net worth feeder channels, particularly through digital and ramping up the impact hiring of client advisers. And I believe the evidence of this is in the 2025 results for the region, as I mentioned, the region's first year post the platform consolidation.

If you look at net new asset and net new fee-generating asset growth, both at 8% for the year in Asia with strong mandate penetration gains, and of course, while they continue to drive their bellwether, which is transactional revenues in an environment where clearly, our advice and structuring expertise are differentiated capabilities.

The next question comes from the line of Joseph Dickerson from Jefferies.

Yes. I just have a couple of quick questions. Is the right way to think about the $26 billion reduction of fully applied RWAs related to the upstreaming of capital to UBS AG is to put, call it, a 12.5% CET1, so it brings down the capital associated with those by about $3.25 billion. Is that the right way to think about it just to be precise?

And could you discuss in the U.S. in terms of the FAs, you're clearly investing in wealth advice centers. So if we think about the net change in FAs, I guess, what's the -- is there a way to think about the marginal pretax associated once the accounts are funded and transacting, et cetera. Is there a way to think about the marginal pretax margin on wealth advice centers versus, say, the back book, if you will, of existing business?

Joe, so the $26 billion reduction in RWA is a function of the portion of the upstream capital that gives rise to either offsets because of it's a repatriation. So it's an offset at the parent level investment in subsidiary accounting or from impairments on dividends. So some portion of the $9 billion were characterized locally for legal purposes as dividend and may have been associated with offsetting impairments. So the $26 billion is the impact.

The way you calculate it is actually the net reduction in the investment in subsidiary account, which is the -- as I said, the portion that's repatriated plus any dividends, any investment valuation change on dividends times 400% because foreign subs, the RWA impact is 400%. So that's how you would get to the $26 billion. So it's effectively $6.5 billion times 4 is another way to calculate it.

In terms of -- you mentioned the buildup in the wealth advice center. I think it is fair to say that our strategy is sort of multifaceted in that respect. One, it's to provide leverage to the more senior advisers in the field. So it helps them to also grow their books of business. Secondly, the advisers that we were hiring in the wealth advice center are also there to build up their own books of business. And I think it is fair to say that the cost to carry in the wealth advice center because it's a different compensation model is lower than your traditional brokerage model that the senior FAs would be subject to. So sure, if we build up successfully the wealth advice center, which is a lever in our strategy as one of the feeder channels, I think it's fair to say that the pretax margin from that business contribution is higher.

The next question comes from the line of Stefan Stalmann from Autonomous Research.

I would like to first ask a question about your targets and ambitions. How do you want us to measure the exit targets for 2026? Is it a fourth quarter number? Or are there pro forma calculations involved? How do you think about this? And also, is there any particular reason why 2028 remains an ambition rather than a target?

And the second question I wanted to ask is on your FRC business in the Investment Bank, can you give us maybe a rough split of how much of that is FX versus how much was precious metals, please?

So the '26 exit rate calculation, well, the expectation will be that we'll look at our -- certainly on the numerator. We would take the run rate -- normalized run rate of where we are at the end of the year and annualize that. I think that's reasonably straightforward in terms of how we would think about the numerator. The denominator, would do the same. Naturally, of course, revenues are always a little bit more interesting in the fourth quarter if you have seasonality. So I think we will look back rather than look forward and develop a denominator that seems reasonable. But we believe that fundamentally, this comes out in the wash as we go through 2027, as I think you would agree, in terms of when we convert this underlying exit rate cost-income ratio, what is that -- is that manifesting through a cost-income ratio when we report in 2027 below 70%. And so that's really the key. But in terms of how we will sort of settle the business at the end of the year, that's my expectation at this point in time.

I think in terms of the ambition versus target, I think the group CET1 -- reported CET1 of 18% and cost-income ratio of 67%, our targets, are they not? Those are targets. So -- but there's no -- given my response, you could see that...

At the end of the day, target and ambitions are almost the same. I would say that the target are more short term. What we can see the look-through is for 2026, we can -- we have a visibility to talk about targets versus '28 and going forward, it's more of an ambition, but I wouldn't be too bothered about overanalyzing that kind of aspect. We want to get there. So I mean, that's what it is.

And Stefan, in terms of the split in FRC on FX and precious metals, we'll come back and give you the specific breakout.

The next question comes from the line of Anke Reingen from RBC.

The first is just to clarify on the '26 share buyback. So you said $3 billion and potentially more. And then you also talked about accrual for the 2027 share buyback. I just wanted to confirm it's not the same thing. So we could have an additional share buyback in '26 on top of the $3 billion plus in accrual for 2027.

And then secondly, on the slide where you talk about the through-the-cycle revenues over RWA, the 10%, is that what informs your 18% return in 2028 as well? And then just I'm a bit surprised that I mean, looking at the 9.6% in 2025, 10% doesn't seem that much of a step-up. So it should be more focused on the shaded area, so it would be like higher than 10%? Or were you sort of like over earning in '25 in some areas?

Yes, Anke. So on the first question, the idea is if we do come out with guidance on what we intend to do in terms of our aim to do more later in the year, we would, at that point, accrue for that. And to the extent that we, as I said in my comments, accrue for the 2027 share buyback or a portion thereof, that would be on top.

In terms of our revenue over RWA, actually, we're quite comfortable with that as a hurdle in terms of the productivity of the RWA that we put to work. You also have to consider there are a lot of headwinds that I described in my comments that we also have to navigate around that. So I talked about a lot of the Basel III headwinds that we have. But certainly, driving higher revenues over RWA and creating RWA productivity, for sure, contributes to the 18% return on CET1.

Yes. And overly focusing on above that level would basically come at a cost of growth. I mean, in terms of net new asset loans, ability to be competitive in pricing. So I think that's having a revenue on risk-weighted assets at 10% is a quite competitive number. And if we overstretch that number, it's going to come at cost of growth. And so I think that we have material upside and marginal benefits in balancing out the efficiency with growth.

The next question comes from the line of Andrew Coombs from Citi.

Can I ask one broad-based question on net interest income and then a follow-up on [ ordinance and ] legislation. On net interest income, firstly, on the Q1 guide for GWM, you called out a small decline due to day count, but also you said deposit rates. Perhaps you can just elaborate on what you mean by change in deposit rates there?

And then my broader question on full year '26 net interest income when you gave your guidance, you talked about the contribution from the ALM exercise in November -- the LME exercise sorry, in November. But can you just talk about the NII benefit across the divisions from that LME exercise? And also the AT1 issuance you recently did in January. I know you did put through your net interest income. So what's the impact to your GWM and P&C NII numbers from that as well?

And then the broad -- the other question, just on the ordinance and legislation, obviously, I think we've all read the Finance Minister's interview in F&W at the end of January. I mean she was talking about AT1 being unsuitable for the purpose of the new capital reform because it would cost the bank as much as equity capital, it would unsettle markets. And if you could just share your thoughts on AT1 versus core Tier 1 capital.

So Andy, so on NII, I mean, normally easing rates are supportive for net interest income in general. But to unpack that a bit, outside the U.S., the benefit from lower deposit rates is more limited because a meaningful portion of our deposits, particularly in Swiss francs, are at or near their effective floor, and we have a significant part of our deposit base in Swiss francs. And as a result, the asset yields or the replicating portfolios reprice down faster and that compresses margins. So that's what I mean by the impact on -- the impact from deposit rates that weigh a bit on the sequential Q-on-Q as rates come lower in -- particularly in the lower rate currencies like Swiss francs, but also euro to an extent as well.

On the LME, the benefit that we see is about $100 million per year across -- net of the PPA across each of the next 3 years, roughly. So we see that, and it's split across Wealth, P&C and with respect to the OpCo issuance we bought back as well non-core and legacy in terms of its funding cost drag.

Yes. On the AT1 topic, I think that, first of all, it's clear that the lessons learned on what happened in 2023 tells us that maybe some clarification around some aspect on how the AT1 should be called into a restructuring are necessary. Having said that, I would just point out that without AT1, Credit Suisse would have gone through a resolution on Monday morning. So I mean, if one want to question the effectiveness of the AT1, we had a concrete and not theoretical example on how it was critical to restoring very rapidly financial stability in Switzerland and also globally. So from my standpoint of view, that's a first observation.

The second one, I would say that the Basel committee has confirmed its total backing of the AT1 as a vital part of the capital stack. So frankly, I think that that's -- it's very important to really understand the international landscape and how these things are working and regulate accordingly.

The next question comes from Flora Bocahut from Barclays.

The first question, I'd like to come back on the buyback, just to make sure I fully understand the message there. Because in the past, you used to do 2 tranches on the buybacks, one in H1, one in H2. So can you clarify, and apologies if you already have on the buyback for 2026, when you say $3 billion and potentially more, when are you going to launch that buyback? And is the plan as of now that the whole of the $3 billion would be achieved over H1? So just to understand here the timing of the buyback.

The second question is about the P&C Bank cost-income ratio. You said in your presentation that you continue to target that exit rate '26 of below 50% and then reported 48% for '28. You said you think you can achieve that even if rates are 0 at the SNB, but obviously, in '25, you're still much higher than that. So can you maybe elaborate again on what gives you the confidence that you can decline the cost-income ratio by so much over 10 points basically in '26? And how much of that would be driven specifically by the decommissioning of the IT system at Credit Suisse?

Sure. So on the first question, in terms of our approach, when we hear further on the ordinance later in the first quarter -- first half of the year, we would come out in a subsequent quarter and potentially offer a view on our willingness to do more? And if so, how much? So that is contingent, of course, on what those final rules say and just if there's even further visibility on the broader regulatory framework in Switzerland. So we would come out and talk about that.

In terms of the $3 billion that we're committing to do, we think it's fair that around $2 billion will be undertaken in the first half of 2026 to think about just timing in respect of that.

On the P&C cost-income ratio, as Sergio mentioned, we're -- it's unlikely we would meet the less than 50% cost-income ratio on an underlying basis in 2026, given the NII headwinds. And as you rightly say, we said that the 48% can be achieved by '28 even in the current interest rate environment. So what gives us confidence on that? So I would say it's 2 things broadly. One, it's P&C building out their non-NII revenues, continuing to grow non-NII revenues, whether it be across personal banking, but also in their corporate and institutional segment. So very focused, especially after the platform migration is completed at the end of Q1 that without distraction that the business is out and improving and driving growth in those areas on the top line.

And then, of course, on the expense side, of course, we have -- it's important to recognize that we're taking a lot of cost out of the businesses that are in their operating margins at the moment. We take those costs out. P&C will be a big beneficiary of the gross cost saves that we take out in 2026. So that's going to help. And then just further efficiency as we do some of the things that Sergio highlighted in his prepared remarks in terms of creating more operating efficiency through continuing investments in our operating model and in technology. So those are the things that give us confidence to get to around 48% by '28 irrespective of the rates environment.

The next question comes from the line of Amit Goel from Mediobanca.

So one question just coming back on the U.S. wealth business. Just in terms of squaring the circle, so I think obviously you're talking about a positive kind of full year flow performance with the first half potentially still being a bit negative, so ramping up in the second half. When I think about that, then it probably does require a bit of more commitment expense. And so to get the kind of better operating margins that I think you're guiding to now for next year and the year after, especially with lower rates. I'm just wondering what are you baking in for the impact from getting the national charter and how quickly and how significantly can that impact? Or should we expect? Or is that baked into your expectations?

And then secondly, just coming back on the capital upstreaming, the $9 billion. I suppose I was a bit surprised that you've been able to accelerate it or to do it a bit quicker. I was just kind of curious because then, for example, in terms of the $26 billion number that has been presented as incremental capital demands, that drops to about $21.5 billion or just above. So I'm just kind of curious why you do this now versus waiting until we have got a bit further down the parliamentary discussion process because it could give the impression that some of these demands are a bit more manageable. So I just wanted to touch on that, if possible.

Amit, on your first question, look, the -- in terms of our '28 ambitions that Sergio described in his prepared remarks in the U.S. pretax margin -- U.S. wealth pretax margin, naturally, the costs are baked in. If you're talking about, I guess -- I think in your first point, you were trying to say more commitment to sort of reverse the net recruiting impacts as well as you talked about the national charter. So the cost of doing that are, of course, in our plans in terms of ramping up recruiting, but also seeing that some of the movements also start to taper as we move through 2026. That is our expectation.

In terms of the timing on the national charter, I think it's -- we already are leveraging the build-out of the banking capabilities, and we're doing quite well with it. We're growing NII. We're growing loan balances and the national charter, we're going to be able to just leverage the progress that we're making. That will take time. Once we get the national charter and we're able to roll out the additional capabilities to clients, it will take time before there's meaningful growth and that contributes to meaningful pretax margin accretion.

You asked about the upstreaming and the timing. I think for us, we're focused on derisking non-core and legacy as fast as possible. That's been our stated objective all along to reduce the balance sheet and take out costs and to do it in a capital-effective way. We've said that from the very beginning. We've made very strong progress in doing that. And as a result, we've been able to satisfy supervisory reviews around the capital that sits in a number of these entities across the globe, including in the U.K. and the U.S. We've secured approvals to upstream the capital, and we've done that.

The last question is coming from the line of Benjamin Goy from Deutsche Bank.

One last question on Investment Bank. We have shown strong revenue growth without any RWA increase. Just wondering whether there's more opportunities left? Or do you expect revenue -- RWA growth to pick up? And are you willing to even allow for disproportionate RWA growth if the opportunities are there?

Benjamin, just on the RWA, look, I think it's important to point out, 2025 just was a particularly strong year for the Investment Bank in terms of their ability to generate revenues in a capital-light fashion. They will always do that because that's the nature of their business, but it was potentially accentuated in 2025 by 2 things. One, I just think the market conditions were such that -- and given our positioning vis-a-vis the market that we were able to generate significant trading flows without significantly taking up market RWAs. So that's one thing.

And the second thing, it's also important, I mentioned that we as a bank are wearing the burden of significant RWA inflation from having implemented Basel III, but also over a number of years in preparing for it. It is fair to say that on trade date, which is the implementation date of Basel III final for us at the beginning of 2025, there were reductions. So even though we -- as I said, we're wearing about $60 billion of additional RWA on settlement date, I should say, of Basel III that we ultimately saw reductions. And so the IB benefited from that as well in 2025 in terms of its RWA consumption. So a number of factors, I think, that played in, in making '25 quite unusual. But look, we always believe that the IB will be able to be successful in a capital-light fashion.

I think there are no further questions. We just thank everyone for dialing in, and we look forward to speaking to you again with our first quarter results. Thank you.

Ladies and gentlemen, the webcast and Q&A session for analysts and investors is over. You may disconnect your lines. We will now take a short break and continue with a media Q&A session at 11:15 CET.

Thank you very much for being here. First of all, thanks Conner for the kind introduction. And Sergio, it's really great to have you here.

And maybe I just kick off right away with your view around the global environment for banking, especially in areas that you're operating in and especially Asia as well, clearly a lot of interest by the audience, how you see that, more your top down view overall.

Well, thank you. It's great to be back here. And well, first of all, I think, that the macro picture has changed for the good in many areas. If I go back only in Q2, at least the tariffs topic has been somehow addressed, but when I look at inflations, it's quite sticky in the U.S. again. And other kind of topics have emerged, which makes me to believe that this quarter and next quarter are probably going to be a little bit challenging from a macro standpoint of view, although we see the rest of 2026 and '27 probably then having a slight recovery.

So in that sense, when I look at market activity and the situation, I'm very pleased to see that clients are still quite active across the board, also in wealth management, broadly speaking, client activity has been quite solid. When you speak about capital markets, the pipeline is building up quite significantly. I think the engagement with clients is very high, not only with strategically, but also with sponsors.

Having said that, if you look at this current quarter, the fee pool is as we -- at this moment, is down around 5%, 6% year-on-year. So if you look at leverage capital markets, it's down 25%. So it's fair to say that last year, in Q4, we had a quite positive environment, very atypical for Q4. And I think that, overall, this quarter is going to be a quarter in which it would be challenging to get back into that kind of quarterly results because if you look at, particularly in the U.S., we lost 6 weeks of window. So deals are there, ready to be executed, but there is a delay.

So in markets, the environment has been quite constructive in the first few weeks. But again, the second half of the year, I don't know exactly what's going to happen. But remember, last year, we had a very, very exuberant environment in November and December. So overall, still positive. But of course, this year, the seasonality comparison is not going to be favorable.

When we look at Asia, the environment that you see in Asia, impacting your wealth business, feels extremely good around Asia, but tell us how you feel about Asia generally now and going forward.

Well, in Asia, of course, we have been -- in general, I think the environment is very constructive. You see the amount of IPOs in Hong Kong, and the activity is really, really strong. And for us, IPO and capital markets activity is highly correlated with our net new assets, net new money in wealth management. So that's really when you really see the nexus of IB and wealth management working well together. You look back at Q3, with almost $40 billion of inflows was a quite testament of that situation. So we still see good momentum.

What I really like about the Asian story right now is, not only that we consolidate our position as a leading wealth manager and asset gatherer with almost -- we have more than $1 trillion of assets right now, $700 billion -- $800 billion in wealth, and $200 billion in the institutional side. But it's really the diversification of the Asian franchise. I mean in the last decade or so was pretty much a China story. Right now, if I look at our growth in Australia, India, I look at Taiwan, Japan, which I was there recently, and I've been going to Japan for the last 34 -- 35 years. And this is the first time I really saw a level of confidence and positivism. And this is the third largest wealth management market in the world. And there are plenty of opportunities. So what I like about Asia right now is a much more diversified story.

Interesting. especially around Japan. And if we then switch over to the integration of Credit Suisse. We are having done the bulk of the integration at fields. We have one more year to go to really finalize that to some extent. Your return on CET 1 exit '26 is 15%. I guess that's still on track. Tell us about how the integration has progressed in terms of culture, synergies, people.

Well, look, I'm very pleased, and I think I'm very also thankful to all the people in the bank for really managing this integration while still delivering for clients. Because at the end of the day, I think that -- and by the way, so in a very changing environment, thinking about what's going to happen in the next 5 years. So the complication is very high.

But of course, the big lessons learned out of this is that in an integration of this scope and size, you need to be quite clear from the very beginning that perfection is not going to be the best way to address it. So we went for what we believe was a clear advantage of the operating model of UBS, the infrastructure of UBS and avoiding the complexity of merging IT systems, but rather taking the chance of migrating clients to one platform, which has proven to be successful and the right decision. Not to say that Credit Suisse didn't have good infrastructure, but the reality is that the luxury of spending time in assessing the best of them would have been quite costly.

Well, by the way, things that we believe are good and were good at Credit Suisse. We kept only 10% of the 3,000 applications and ITs, right? But some of them are in a fide. They're going to be taken out as soon as we finish the integration and then deploy them.

So the second topic is the culture. I mean I think that was -- you mentioned the culture because I think it's a very important element. From the very beginning, we made it very clear that we would run the bank as in a matrix organization despite the fact that we still had legal entities and operating banks being separated. And by the end of 2023, all the people at UBS and Credit Suisse, they were on the same HR system for year-end processes in terms of valuations, promotions and compensation, end of 2023. That was a very strong signal.

We kept based on meritocracy around 20%, 25%, of the second, third level in the organization are former Credit Suisse employees. So the cultural integration in the matrix organization from day 1, plus the fact that we have been giving significant positions to the Credit Suisse made it clear that we wanted an integration, although it was an acquisition, right?

And the fact that today, the level of satisfaction of UBS employees versus Credit Suisse is at the same level, and it's 10 points above industry standards. So this is a huge element of -- this is the KPI I have to tell you, I'm most proud of. Because at the beginning, there was a big debate on how our -- those 2 culture going to match. And the truth of the matter is that they are quite successful.

Now the second -- and managing also the capital stack, the efficiency because, of course, we inherited a bank that was loss-making. So it was not just an integration of 2 growing-concerned banks that are trying to optimize. One was gone, right? So restructuring cost, balance sheet was a big topic. I'm very happy with the noncore trajectory, both in terms of risk-weighted assets and cost. And now we are completing the journey. During the quarter, you saw that we did a big LME program. We bought back $8 billion of debt that was quite expensive debt issued by Credit Suisse. It's going to cost us $0.5 billion in this quarter that we're going to book in group items, but it's going to be very -- and 10 basis points of CET1, but it's the most important issue is to say, try to get as close as we can to the exit rate so that in 2027, you have a true visibility on what is the power of the underlying core operating bank without legacy issues.

So very happy, but still, it's not over. We still have to migrate 15% of the 1.2 million clients, so around 250,000 clients in Switzerland. It was a very successful migration over the weekend. So we are now at 950,000 clients migrated. But the complexity is going up because we are now migrating the last chunk of wealth management clients, very complex products, but I'm confident we're going to get there.

And your return on CET 1 target of 15%, exit '26, well on track from what we...

We are on track with our targets. I have to say that when I look at also in terms of cost, you saw we already achieved $10 billion out of the $13 billion. So the last $3 billion is really all about finishing the 15% because until the last client is out, we can't shut down applications and data centers and IT systems. So we already took off 50% of the legacy applications and 60% of the servers and so on. But the last $3 billion are coming late.

And clearly, when I look at consensus, I mean, people still don't understand that it's rather in the second half of 2026 that we can shut down the systems. Because end of Q1, we finished the migration. Then you need all the preparation and then you start to shut down and then you get down to the exit rate. But I'm still very comfortable that we're going to deliver on our exit rate targets.

I mean it is from our perspective. I mean, it's the only large -- huge G-SIB merger that we've seen since the GFC. And it's, from my perspective, at least, the best integration I've ever seen in terms of mergers. So it's been extremely smooth so far.

Now taking a different shift. Clearly, there's been a lot of regulatory issues coming up as well. So we want to talk more about integration and operational issues, but I think we also need to address for the audience some of the regulatory issues that are coming up. And maybe I can start with the whole issue of ordinance. I just tried to understand the ordinance charge of roughly $11 billion DTA, software, PVA. How do you see yourself in a position relative to global peers as a result of this? And how do you think about the time frame? And give us your general view around the ordinance issue.

Well, look, when I look at -- the ordinance is part of a package that is going to -- I mean, we have 25 or plus kind of proposals on changes in the regulatory framework. But when you look at the capital, there are basically 2 topics. One is the ordinance, and one is the one that is mainly addressing the subsidiary, capitalization of the subsidiaries.

The ordinance, it's really something that -- from a competitive standpoint of view, it is very difficult to understand because if you look at what really happened at Credit Suisse, this has very little to do with what happened at Credit Suisse. Actually, you could argue that many of the proposals have little to do what truly happened at Credit Suisse. Not what is talked about happened at Credit Suisse, but what truly happened at Credit Suisse is that software and DTA for sure, didn't play any role. And group capital, for sure, didn't play a role. So it's very, very difficult to understand a proposal that are so far away from international standards and that's so little to do with lessons learned.

But it's not just my opinion. I mean, probably it's your opinion and many other opinion. And anybody who is looking at this topic in a very unemotional way comes to the conclusion that these are excessive and not internationally aligned. And if it's not internationally aligned, to answer your question, it means that you are not competitive.

So for us, it's really important to make sure that facts drive the decision on how to potentially improve matters. There are lessons learned out of this crisis. Potentially, you can always improve. But particularly when you go about DTA and software, going too far is definitely not something that is reflecting of the underlying nature of our bank work and our international regulation work. And we, as UBS and we, as Switzerland, we are in competition. We are not operating in our crystal glass -- under a crystal bell in which we think that we can do things on our own. Our clients are international, no matter if they are booked in Switzerland or internationally. And therefore, we need to be competitive.

And if we look at the legislative process, which you could get to roughly $24 billion of capital impact for you. Where are we there in the debate? And how do you see from your perspective, a reasonable outcome? Is there a reasonable outcome really in this respect?

Well, you see the risk in talking about what a reasonable outcome is, is that there is so much subjectivity depending on how you look at things. For me, reasonable is only something that allow us to be competitive and -- but also really being able to be competitive while being a source of stability and strength to the system. So that's the reason why, just looking simplistically at capital without, for example, considering that a major element in my point of view that should be a focus and will be a focus, I hope, of the future regulation in Switzerland, is to understand the true recovery and resolution plan of a bank and how you minimize the risk for taxpayers in that issue.

So when you look at a reasonable capital outcome, you need to look at a reasonable understanding for not only experts, but also for people out there, for politicians to understand, is the bank resolvable without creating collateral damages to the economy? And how is then a public liquidity backstop helping avoiding even the risk of a run? And so you have to create an ecosystem that goes beyond just going down, as we mentioned before, purely discussing about one item, ordinance, what does it mean.

So the compromise is the ability to really look holistically on how you make the financial system stronger. And the lessons learned from the financial system is that past the financial crisis, take out Credit Suisse, which was a clear idiosyncratic situation, big banks, G-SIBs were a safe haven, an anchor of stability during all the crisis we had since then with COVID and even -- the proof points of that, UBS' ability to step in and rescue a G-SIB within hours. And within weeks, stabilizing it is the proof point that something is right in the system. Now we always can learn, but we should do evolutions, not revolutions.

And do you feel they're listing? Because from our perspective, I can tell you we have -- we get quite a lot of incomings from the Treasury, the Feds, the Bank of England or the ECB, but I have never had a call from the FINMA or Swiss Government to just discuss, "Okay. How do you guys see it from a market perspective?" Do they really understand in your view? And what is the balance of discussion at this point? How do you actually prevail your view?

Maybe because they already know everything better.

We'll see how this will develop. In terms of your perspective, you have said that we are not going to give a piecemeal optimization of our potential outcome and how we mitigate potentially some of this. We're going to do it once we are ready. What has to happen for you to say we are ready at this point to give you a little bit more detail how we think about how UBS will be run going forward?

It's only, as you expect me to do, is when I know facts and I can make statements and I can make commitments. And in absence of clarity on what it is exactly, it's very difficult for me to go into mitigation discussions or any other item because depending on what it is, you may have different options. And starting to discuss about speculating or going through hypothesis, it's really, in my point of view, even more confusing. Of course, we're going to have to take actions.

The current proposal are not acceptable. Let's be very clear. I mean, they are not going to work for us. We're going to respect whatever the outcome is, but they're not going to work for us. So things have to be taken. And I can assure you that there is no low-hanging fruits. Because we have been planning carefully in 2023, '24 on what needed to be done to make sure that out of such a tragic unnecessary event, we could do something good for UBS shareholders, for clients, for employees and for the country.

But the issue is that we can't go beyond a certain level of efficiency. There is a point in time in which it's impossible to be -- I mentioned that jokingly, but it's quite serious in my point of view. We are not magicians, right? So I mean, I'm sorry, we can't just go as far as optimizing the situation. And then we're going to have to really look at what are other actions we have to take. But at this point in time, I don't really want to speculate about what it is.

Understood. And clearly, one question, and I'm going to phrase it a bit differently is, do you really need to be a Swiss bank? I mean, could you be a U.S. bank? Could you be a U.S. operation headquartered in a different country, from Switzerland or even Germany? Is there optionality? Do you see that actually as an optionality? It's been speculated, I know, a lot in the press. But just from a kind of practical perspective, is that actually possible to move headquarters?

Look, again, talking [Audio Gap] I say about this topic is going to be instrumentalized and interpreted in [ ways]. Every day, almost everybody is lecturing us on how we should say and what we should say. And the truth of the matter is that we want to be a Swiss bank. We believe that being a Swiss bank is very -- has been good over the last 150, 170 years and for both the bank, the clients and for Switzerland. So this is the best possible outcome.

And this is what myself, my Chairman, Colm Kelleher, we are working on. This is the only -- the rest is BS. So we never ever tried to leave the country. This is absurd, right? And even implying that we are doing that is totally respectful. It's not true. Having said that, nothing can stop you to ask me the question, right? And so everybody can come to his own conclusion. Nothing can stop shareholders to voice their view on what we should do. But our solely focus right now is to make sure that out of this process, we get something that works for both UBS and for the country.

It's amazing how operationally you have performed, and it's a bit -- it's overshadowed by what's happening. I think it sets a precedent for G-SIB mergers going forward, I think. And also we get questions clearly from clients, will ever somebody buy, for example, Julius Baer. I don't think anybody will touch a Swiss bank after the way you have been treated, frankly. So we will see how this develops. And if you have your opinions about that topic, very interested as well.

No. Look, I think, I'm hopeful that a reasonable outcome can be reached, reasonable that works for both, for shareholders, for clients. Because at the end of the day, it's also very important that our clients can bank with somebody that is able to serve at an attractive not only quality, but also pricing point. There is a lever in which you can pay up for a certain service but another one that you can't. And so for us, it's important to understand that pricing our services is a outcome of how much capital we need to hold. And so I'm hopeful that we can find a solution that combines the right things for UBS' shareholders, clients but also for the country.

I hope they're listening. So moving back to the operational side and where you're doing extremely well. Maybe start at the U.S. wealth management business. You reached in the third quarter pretax of 13% plus. You want to move towards 15%. Tell us about the operational side and how you're improving. There's been clearly quite a few changes in the U.S. business, how you're positioning it on the U.S. wealth side? And the end game really, how you see the U.S. wealth business, not just to get to 15%, but what is the end game of the U.S. wealth business?

Yes. Look, I'm very pleased with the progress we made in the last 18 months or so. This is a big journey. It's de facto a 3-year journey to get to the 15%. And frankly, it's not going to be a straight line. It may be a little bit bumpy because when you make so many changes like we are doing right now, inevitably, you have some collateral consequences. But I'm very pleased with the fact that in terms of, first of all, capabilities. Our focus is really to make our client adviser who are the most productive in the industry, very focused on the segment of clients that we are focusing on, the ultra net worth family offices, even more efficient and successful with their clients by rolling out IT capabilities and enhancing the products we give them, both from assets, but also from a banking standpoint of view, banking services, credit, deposits. You saw that we filed for -- the banking licenses in the U.S.

So I'm very hopeful that we're going to get to the 15%. But the 15% is not the end of the journey. It's the first plateau we need to achieve, right? And the goal is really the same, to narrow the gap between us and the local players. I'm still convinced, and actually, it's a fact that it's going to be very challenging and probably even impossible for us to have the same pretax margins of our U.S. peers on a like-for-like basis, considering the nature of their businesses in the U.S., which allows them to spread fixed cost of the banking infrastructure across different businesses.

So as a business segment, you always get a pro rata of the fixed cost of the bank. So we have only 3 businesses in the U.S., and therefore, we have a natural disadvantage. That's okay. Our U.S. peers have a natural disadvantage with us outside the U.S. So they are unlikely to match our margins outside the U.S. in the foreseeable future.

So we need to look at the U.S. as the biggest market in the world. in which we are a big player in a differentiated manner and allowing us to create diversification and value creation for shareholders and not to be too paranoid about having like-for-like comparison. We are paranoid, but in the right way, in a balanced way. So I'm very hopeful that the journey is in the right trajectory, but it's a midterm journey, 3 years, 4 years.

Yes. On a sustainable basis, basically. Yes. And you mentioned your other wealth management operation outside of the U.S. And maybe you can talk about a little bit the regional performances that you see, also how you see the -- your view around those regions, Asia, Middle East and Europe. We've seen some Lombard lending picking up as well, finally. Do you see releveraging coming back? Or is it still too early? Do you see any other activity levels which you would highlight, considering you've done extremely well?

No, we touched on Asia. I would say that I'm also pleased to see something that we don't really talk a lot about, but also the EMEA franchise has been also developing quite well. It's fair to say that it's not because of wealth creation. Unfortunately, in Europe, there is a little of that. But working through the integration, gaining a share of wallets, looking at optimizing our portfolio of what we do. Also from a legal entity standpoint of view, infrastructure standpoint of view has allowed us to improve the profitability in the EMEA. And so I'm very hopeful that we can also make a good progress there.

In terms of releveraging, no, I don't see a lot of that happening at this point in time. I do believe that if rates comes down and the markets are stabilizing a little bit, I would say you will probably see some things coming back. At this stage, clients are more focused on hedging downside protection. And in the next few months, I don't really expect a lot of leverage to come back. I mean you look at what happened in the last few weeks, I don't really believe is a moment in which people -- also from a seasonality standpoint of view, it's unlikely people will leverage up before the new year.

Yes. Maybe I have lots of questions, and I could keep your time all day, Sergio. But we'll open up maybe for questions on the floor at this point and who would like to ask a question. Otherwise, I have lots of questions. There's one in the back. There are mics on the table. Please help yourself.

Sir, could you share your views on the domestic retail and commercial business of the bank as well as your intermediate-term vision for this, in particular, focusing on the relative importance of this business and the overall banking strategy?

Thank you. Actually, it's a very good complementary question because it's a very important part of our business. I mean if you look at our strategy, it's centered really towards a comprehensive and competitive and offering in the Swiss market and leadership globally on wealth management. And both are complemented by having a focused investment bank and the asset management businesses. So the Swiss business is definitely going through, at this stage, a very challenging environment in terms of top line developments.

You saw with rates now going down to zero, we had a big headwind on NII. But other than that, I'm very pleased to see how we have been able to keep a big chunk of our market share. We lost market share, which was almost inevitable as a consequence of merging the 2 large banks. But in relative terms, I'm very happy that we have been able to go through the migration. The destruction of the migration and integration in Switzerland, I mean, if it's complicated for the IB and wealth management, you can imagine what it means for the local markets in which we had basically 200 branches at UBS, 100 at Credit Suisse. They are small numbers, but it's a small country, right? But still quite challenging to operate. The fact that the business hasn't really suffered in that sense is quite remarkable.

And that makes me look very optimistically to the future because post the integration, people will go back into being able to grow the business and really unlock the full potential of an even more comprehensive offer that we can give now to clients because the combination of UBS and Credit Suisse in Switzerland is, it was not just overlapping all the time, both from a client standpoint of view, but also from a capabilities standpoint of view.

So I think, I'm very positive about the fact that we will be able in a normalized cycle to get to our below 50% cost/income ratio and gain back some in selective areas, some market share.

And I assume the guidance of exit 50% -- below 50% cost income by year-end '26 in that division should be still well on track from what we've seen.

Well on track is a little bit of a stretch because, of course, back then, we had a completely different rate environment.

That's true.

But still, we are working hard to get -- basically, on everything that is alpha, I'm pretty convinced we're going to execute. The beta factor, I mean, the drop in rates is quite substantial. Now it's fair to say that anything that moves ups or down on rates from here onwards is positive. So status quo is not good.

Yes. And considering we are almost out of time, but I wanted to ask about the IB because -- so we can wrap almost everything up.

I was about to beat the record of not getting an IB question.

No. Sorry, Sergio, we have to. The IB, just very briefly in terms of your views around the IB, but also are you happy with the footprint, geographically, business mix?

Look, I'm very happy with the progress we are making in a very competitive environment. Of course, you know well how competitive the situation is not only from the U.S. banks, but also more and more European banks wants to beef up again their own capabilities, and it's a deja vu.

I mean what I really think that is very important for us, for our clients, for our shareholders is to fully understand that for us, nothing has changed. We have a strategy that is very focused on not being a one-stop shop. We want to be good in the areas where we believe we can add value to clients and to shareholders. And so I'm very pleased to see the good momentum we are having in equities, in FX, in research, in capital markets activities. And also in the banking part, the investments we made by retaining a big chunk of the banking capabilities of Credit Suisse are starting to pay off in terms of -- you saw last quarter numbers. The pipeline is developing in the right way.

We want to continue to operate within our defined capital allocation targets. We believe there is a scope for us to be relevant in our own way without being too paranoid about how other people are operating and their ambitions.

So the trade-off there is clear that we're never going to be the best-in-class in terms of cost/income ratio, but we want to be the best-in-class in return on risk-weighted assets. So our philosophy is the same. And size is not all. And clients, they like our -- we are -- our focus and our capabilities, and this is the winning way for us to go forward. And it's also the right way for us to stay focused on serving the wealthy clients and the corporate clients in Switzerland.

Thank you very much for your time, Sergio. I think we've gone around every topic that we wanted to discuss. And hopefully, we have you with us next year again.

Thank you.

Thank you.

Ladies and gentlemen, good morning. Welcome to the UBS Third Quarter 2025 Results. The conference must not be recorded for publication or broadcast. [Operator Instructions]

At this time, it's my pleasure to hand over to Sarah Mackey, UBS Investor Relations. Please go ahead, madam.

Good morning, and welcome, everyone. Before we start, I would like to draw your attention to our cautionary statement slide at the back of today's results presentation. Please also refer to the risk factors included in our annual report together with additional disclosures in our SEC filings. On Slide 2, you can see our agenda for today.

It's now my pleasure to hand over to Sergio Ermotti, Group CEO.

Thank you, Sarah, and good morning, everyone. The power of our unique business model, diversified global footprint and balance sheet for all seasons was evident once again in our excellent performance this quarter. Regardless of how you measure our third quarter results, we delivered strong returns driven by significant momentum in our core businesses and disciplined execution on our strategic priorities.

Invested assets reached nearly $7 trillion across the group, supported by robust flows in Global Wealth Management and also Asset Management, where we surpassed $2 trillion in invested assets for the first time. In APAC, invested assets across our asset gathering businesses now exceed $1 trillion. And this quarter's exceptionally strong flows underscore our position as the region's largest global wealth manager. The buildup of our investment banking capabilities in areas of strategic importance supported our outperformance of industry fee pools and is consistent with our ambition to increase market share.

We also saw healthy private and institutional client activity across the globe. In Switzerland, our clients continue to benefit from UBS' unique global footprint and capabilities as we supported businesses and households with around CHF 40 billion of loans granted or renewed during the quarter. I'm particularly pleased that we achieved all of this while further advancing on our integration efforts. Over 2/3 of clients accounts in Switzerland, more than 700,000 have now been migrated onto UBS platforms. We have substantially completed the migration of personal banking clients and commenced corporate and institutional client transfers.

We are encouraged to see improved satisfaction from clients who are now on the UBS platform, and we remain on track to complete the final migrations by the end of the first quarter next year. The integration of Asset Management is also substantially completed, allowing us to fully focus on opportunities to drive efficient growth. Across the group, we continue to streamline our operations. We are nearly halfway through our application decommissioning road map, and we have shut down 60% of legacy servers and proceed around -- and processed around 40 petabytes of data.

This keeps us well positioned to deliver on our gross cost savings ambitions by the end of 2026. Our recent employee survey highlighted what, in my view, is one of the most important markers of our integration progress. Sentiment across UBS and former Credit Suisse colleagues is now equally positive and well above industry benchmarks, further validating our efforts to create a common culture and vision across the organization. I'm also pleased that we resolved significant legacy litigation related to Credit Suisse's RMBS matter and UBS' legacy cross-border matter in France in the best interest of our shareholders.

All of this progress and business momentum further reinforces our capital strength and confidence in our ability to execute on our capital return plans as we continue to deliver on our 2025 objectives for dividends and buybacks. As previously communicated, we will provide more details on our plans for 2026 with our full year results in February. Our priorities extend beyond staying close to our clients and successfully completing the integration. We also remain committed to strategically investing across our platform to position UBS for sustainable growth.

Earlier this week, we filed our application for a national bank charter in the U.S., and we expect approval in 2026, a pivotal milestone in our multiyear strategy to improve the breadth and depth of our client offering and setting the stage for long-term value creation. At the same time, we are advancing our AI capabilities. We now have 340 live AI use cases across the bank, increasing resilience and building the foundation to enhance the client experience and deliver meaningful gains in efficiency and productivity.

With respect to the ongoing political process on banking regulation in Switzerland, as you saw at the end of the quarter, we submitted our response to the Capital Adequacy Ordinance consultation. We will do the same for the ongoing consultation on capital requirements related to foreign subsidiaries before it ends in early January. Looking to the fourth quarter, with valuations elevated across most asset classes, investors remain engaged but increasingly focused on managing downside risks, which is also evident in periodic headline-driven spikes in volatility.

Against this backdrop, transactional activity and our deal pipelines remain healthy, though sentiment can shift quickly as confidence in the outlook is tested and seasonal effects come into play. Furthermore, macro uncertainties along with a strong Swiss franc and higher U.S. tariffs are clouding the outlook for the Swiss economy and a prolonged U.S. government shutdown may delay capital market activities.

Summing up, I'm very pleased with our strong results this quarter, and I am extremely thankful to my colleagues for their continued dedication and focus amid ongoing macroeconomic and regulatory uncertainty. We will stay very focused on executing on our strategic priorities while we remain a trusted partner in the communities where we live and work and position UBS for long-term value creation for all stakeholders.

With that, I hand over to Todd.

Thank you, Sergio, and good morning, everyone. Throughout my remarks, I'll refer to underlying results in U.S. dollars and make year-over-year comparisons unless stated otherwise. In the third quarter, we delivered reported net profit of $2.5 billion, up 74% and earnings per share of $0.76. Our underlying pretax profit was $3.6 billion, up 50% on 5% revenue growth, and our return on CET1 capital was 16.3%.

Included in our underlying performance are net litigation reserve releases of $668 million, primarily driven by the resolution of legal matters related to Credit Suisse's RMBS business and UBS' legacy cross-border case in France. Excluding litigation, our return on CET1 capital was 12.7% as we grew pretax profits by 26% across the group and by 19% in our core divisions. Moving to Slide 6. This quarter's strong financial performance is once again proof of the enduring advantages of our platform. We saw broad-based client momentum in constructive markets and disciplined execution across the franchise.

On a reported basis, our pretax profit was $2.8 billion with $561 million of revenue adjustments and $1.3 billion of integration-related expenses. Our tax expense in 3Q was $341 million, representing an effective tax rate of 12%, supported by the net litigation releases. In the fourth quarter, we expect our tax rate to normalize, resulting in a low double-digit effective tax rate for full year 2025. This excludes any effect from revaluing our DTAs as part of the year-end planning process.

Turning to our cost update on Slide 7. In the third quarter, we continued to deliver on our cost reduction program as we make steady progress in rightsizing our technology estate, streamlining functions and reducing third-party spend. These efforts translated into $900 million of incremental gross run rate cost saves in 3Q with the cumulative total reaching the $10 billion mark, 1 quarter ahead of schedule. Compared to our 2022 baseline, we nominally decreased our overall cost base by around 13% or by 24% when excluding variable compensation, litigation and currency effects.

On this basis, our conversion rate of gross to net sales is 77%. Similarly, integration costs this quarter are indicative of the scale and intensity of the ongoing Swiss platform migration effort. We expect moderately lower levels of cost to achieve in the fourth quarter as the program enters its final stretch with completion early next year, after which these change-related expenses will taper further. Our integration costs to date also reflect the additional opportunities we've identified along the way to realize further efficiencies, accelerate benefit capture and in select cases, drive incremental revenues.

We'll update you next quarter on our 2026 integration cost budget and the gross cost saves we expect to deliver as we sunset integration at the end of next year. As in prior years, we expect more modest gross and net saves in the fourth quarter as a result of our continued focus on the Swiss platform migration and a seasonal uptick in select non-personnel items, notably the U.K. bank levy.

Turning to Slide 8. As of the end of September, our balance sheet for all seasons consisted of $1.6 trillion in total assets, down $38 billion versus the end of the second quarter. Loan balances remained broadly stable at $666 billion with around 92% secured by collateral. Mortgages accounted for 58% of the total with average loan to values of about 50%, while Lombard lending represented a further 24%. Credit-impaired exposures in our lending book remained stable quarter-on-quarter at 90 basis points, while the cost of risk decreased by 4 basis points.

Group credit loss expense was $102 million, mainly relating to nonperforming positions in our Swiss business. Our tangible book value per share grew sequentially by 2% to $26.54, primarily from our net profit, which was partly offset by share repurchases. Overall, we continue to operate with a highly fortified and resilient balance sheet with total loss-absorbing capacity of $199 billion, a net stable funding ratio of 120% and an LCR of 182%.

We were active issuers during the quarter, capitalizing on particularly favorable market conditions. We placed around $3 billion in AT1s and over $7 billion in HoldCo, both at attractive levels, enhancing our funding position and reducing financing needs for next year. Looking ahead, we'll remain focused on further strengthening our funding profile as market conditions allow.

Turning to capital on Slide 9. Our CET1 capital ratio at the end of September was 14.8%, and our CET1 leverage ratio was 4.6%, both up quarter-over-quarter and above our target levels of around 14% and above 4%, respectively. Looking ahead, we expect our year-end 2025 CET1 capital ratio to decrease sequentially, driven by an accrual for intended share repurchases in 2026 as well as the full year 2025 dividend. The amount of the accrual will be informed by our ongoing strategic planning process and remains subject to the continued successful execution of the Swiss platform migration as well as visibility on the shape and timing of future capital requirements in Switzerland.

Turning to UBS AG. The parent bank stand-alone CET1 capital ratio was roughly unchanged at 13.3%. Similar to last quarter, we continue to pace intercompany dividend accruals to maintain prudent capital buffers and offset the FX-driven headwind on leverage ratios across group entities. While we maintain our intention to operate UBS AG's stand-alone CET1 capital ratio between 12.5% and 13%, we'd expect the parent bank to remain above the upper end of the target range, particularly if dollar Swiss stays near current levels.

Turning to our business divisions and starting on Slide 10 with Global Wealth Management. In a constructive macro environment, GWM delivered a pretax profit of $1.8 billion. Excluding litigation, profit before tax was $1.6 billion, up 21% year-over-year, with APAC, the Americas and EMEA, all delivering double-digit profit growth. Asia Pacific was a standout with pretax profit up 48%, driven by 16 percentage points of positive operating leverage. With the platform migration work largely behind us in the region, the team is now fully focused on delivering for clients and growing the franchise.

We're building on our distinctive advantages in scale, global connectivity and cross-divisional capabilities. That's evident in this quarter's strong flow momentum, top line expansion and disciplined cost management. Americas pretax profits grew by 26%, reflecting another quarter of strong revenue growth across all revenue lines and positive operating leverage that lifted pretax margins to 13.4%. Transactional revenues continue to benefit from the sustained momentum of GWM's collaboration with the Investment Bank, where jointly developed capabilities and solutions are resonating with advisers and deepening relationships with clients.

The Americas team also made further progress enhancing its banking platform to support ongoing net interest income expansion. Excluding litigation, EMEA delivered a 13% increase in pretax profit, driven by higher transactional revenues as clients actively hedged equity and U.S. dollar exposures. On the same basis, in our Swiss wealth business, profit before tax decreased by 3% as NII headwinds from Swiss franc interest rates offset strong recurring fees, while transactional activity was somewhat softer than in other wealth regions.

On to flows. GWM's invested assets increased by 4% sequentially to $4.7 trillion from favorable market conditions and strong asset flows. In the third quarter, we delivered net new assets of $38 billion, representing a 3.3% annualized growth rate. The quarterly performance was driven by exceptional inflows in Asia Pacific, which alone contributed $38 billion. This included a small number of sizable flows linked to strategic holdings as well as strong client momentum across the region. EMEA and Switzerland also contributed positive net new assets of $6 billion and $3 billion, respectively.

Net new assets in the Americas were negative $9 billion, primarily reflecting adviser movement following the structural changes we introduced last year, including to the compensation grid as part of the franchise's broader realignment. Importantly, the strategic reset is already driving improvements in the region's pretax margins and operating leverage, thereby unlocking investment capacity to further enhance the platform's capabilities and solutions to help advisers grow their books and better serve clients.

Looking ahead, we expect turnover to moderate, supported by a healthy recruiting pipeline and a record number of advisers choosing to stay and ultimately retire at UBS. Net new fee-generating assets in the quarter were $9 billion, supported by sustained demand for discretionary mandates, including our SMA solution in the U.S. and My Way in our Swiss and international franchises as well as our advisory offerings. Regionally, NNFGA growth was especially strong in APAC and EMEA with annualized growth rates of 8% and 6%, respectively.

At the same time, net new deposit outflows of $9 billion largely reflect the reversal of dynamics observed in the prior quarter. While the uneven market backdrop in 2Q prompted clients to tactically reposition towards liquidity solutions, in the third quarter, clients actively redeployed capital into investment and trading solutions on our platform. Client releveraging continued for the third consecutive quarter, driving positive net new loans across all regions. In 3Q, net new lending was $3.5 billion, largely driven by Lombard and mortgages in Switzerland and the Americas.

Turning to revenues, which increased by 7%. Recurring net fee income grew by 7% to $3.5 billion, supported by positive market performance and over $55 billion in net new fee-generating assets over the past 12 months. Transaction-based income rose 11% to $1.3 billion, with notable strength across structured products and cash equities. Net interest income of $1.6 billion was up 3% year-over-year and up 5% quarter-over-quarter, with the sequential trend reflecting a favorable mix shift towards transactional deposits as well as lower funding costs.

Looking ahead to 4Q, we expect net interest income to be broadly stable sequentially as modest growth in lending balances should largely offset headwinds from lower rates. Operating expenses in GWM were down 1% and were lower by 2% when looking through variable compensation, litigation and currency effects.

Turning to Personal & Corporate Banking on Slide 11, where my comments will refer to Swiss francs. P&C delivered a third quarter pretax profit of CHF 668 million, up 1% or down 3% excluding litigation, a resilient result given the Swiss macro backdrop of 0 interest rates, a stronger Swiss franc and trade uncertainty. Importantly, these results were achieved during the most operationally intensive phase of our integration efforts, demonstrating disciplined execution and client focus, while the team continues to advance the client platform migration in the Swiss booking center.

Revenues across recurring net fee and transaction-based income were up 2%. In Personal Banking, the migration of Credit Suisse client accounts onto UBS' platform is already supporting positive revenue momentum through deeper client engagement and adoption of our discretionary solutions. Personal Banking transactional revenues increased by 10% and recurring fee income was up 6% alongside positive net new client assets. In our Corporate and Institutional Client business, non-NII revenues rose modestly year-over-year despite the Swiss operating environment.

Growth in Corporate Finance revenues more than offset softer FX hedging and export finance activity, reflecting currency and trade policy effects, respectively. Net interest income decreased by 9% year-on-year. Sequentially, Swiss franc NII increased by 1%, driven by lower funding costs and deposit pricing measures offsetting the impact of the 25 basis point rate cut announced in June. For the fourth quarter, we expect NII to be broadly flat sequentially, both in Swiss franc and U.S. dollar terms.

Turning to credit loss expense. CLE in the third quarter was CHF 58 million on an average loan portfolio of $248 billion, translating to a 9 basis point cost of risk, down 5 basis points sequentially. This included Stage 3 charges of CHF 56 million, largely driven by a small number of positions in our corporate loan book. For the fourth quarter, we expect CLE to be around CHF 80 million, reflecting continuing global macro uncertainties that are also affecting Switzerland. Operating expenses declined by 8% this quarter or 6% excluding litigation, underscoring continued cost discipline with further synergies to come once the Swiss client migration is completed.

Moving to Slide 12. Asset Management delivered a pretax profit of $282 million, up 19% year-on-year. Excluding net gains on disposals, AM's profit before tax was up 70% on 5% higher revenues. Performance fees in the quarter nearly doubled to $87 million, supported by strong hedge fund results. Net management fees were stable at $755 million, reflecting higher balances and favorable currency effects, which were offset by industry-wide headwinds from clients shifting into lower-margin products over the past year.

Invested assets in the quarter grew by 5% sequentially, surpassing the $2 trillion mark for the first time. With integration now substantially complete, Asset Management is well placed to leverage its broader scale, enhanced product offering and improved efficiency to drive sustained value creation. Net new money was $18 billion, a 3.7% growth rate, with positive flows across all asset classes, with particular strength in strategic growth segments, including $6 billion in ETFs and $4 billion in U.S. SMAs.

Flows were also strong in Unified Global Alternatives, where Asset Management's new client commitments in the third quarter reached nearly $2 billion, alongside $8 billion from Global Wealth Management clients. Overall, assets invested in UGA reached $317 billion, up 4% quarter-over-quarter. Operating expenses declined by 12% year-on-year, reflecting execution on AM's commitment to improving operating efficiency.

On to the IB on Slide 13. Our Investment Bank delivered a very strong third quarter with pretax profit of $787 million, more than double year-on-year. While maintaining its capital discipline, the IB generated a return on attributed equity of 17%. These results highlight the strategic value of our investments in expanding our global reach and strengthening our talent, technology and capabilities. At the same time, the IB's close partnership with Global Wealth Management continues to drive increased client activity and revenues, particularly through jointly delivered structured solutions, a key differentiator in serving our wealth clients.

Across the franchise, we saw broad-based regional momentum, driving revenues up by 23% to $3 billion with the highest third quarter revenues in both Global Banking and Global Markets. APAC was again a standout, posting its best quarter on record with strength across the franchise as our deep regional coverage and scale allowed us to capture elevated market activity and reinforce the region's strategic importance to the group.

We're also pleased that our strength in APAC was recognized by Euromoney, which named us Best Investment Bank in Asia. Banking revenues reached $844 million, a 52% increase year-on-year, with each region outpacing the fee pool and delivering top line growth in excess of 40%.

In Advisory, revenues increased by 47%, led by M&A delivering its best quarter on record. Capital Markets was 55% higher as LCM fees nearly doubled, led by outperformance in the Americas and EMEA and ECM revenues grew by 1.5x, driven by the pronounced uptick in IPOs and convertible activity. For the fourth quarter, we expect banking activity to normalize from Q3's exceptional levels. In addition to seasonality factors, our guidance reflects both transactions brought forward into the third quarter and potential timing effects from the U.S. government shutdown delaying capital markets activities.

Looking further ahead, our strong pipeline positions us well to deliver on our medium-term objectives provided market conditions remain constructive into next year. Supported by high equity volumes and sustained client activity, Global Markets revenues rose by 14% to $2.2 billion despite a strong prior year comparative and more normalized levels of volatility, showcasing the strength of our equities and FX businesses.

Equities revenues increased by 15%, with cash equities reaching a new high as we capitalized on our strongest market share to date. In financing, top line growth of 33% was supported by prime brokerage delivering record level revenues and client balances. FRC increased by 13% with growth across all products. For the fourth quarter, we expect more normalized levels of transactional volumes in Global Markets, particularly when compared to the especially strong prior year period, which was supported by unusually elevated market activity ahead of the U.S. administration transition.

For the IB overall, operating expenses rose by 7%, largely driven by increases in personnel expenses. On Slide 14, noncore and Legacy's pretax profit was $102 million with negative revenues of $42 million. Within revenues, funding costs of around $100 million were partly offset by gains from position exits in securitized products and macro. Operating expenses in the quarter were negative $149 million, driven by net litigation releases of $440 million. Excluding litigation, expenses were down 56% year-on-year and 18% sequentially as the team continues to make strong progress in driving out costs.

On to Slide 15. Since the second quarter of 2023, NCL has reduced its nonoperational risk RWAs by almost 90%, including additional reductions of $2 billion this quarter, freeing up over $7 billion of capital for the group life to date. The wind-down efforts expertly executed by the team over the past several quarters have not only significantly strengthened our capital and risk position, but have also reduced the divisional cost base by nearly 75%. As of the end of September, NCL had closed 94% of the 14,000 books it started with and decommissioned 65% of its IT applications, further reducing operational complexity and driving its strong cost reduction performance.

To conclude, the third quarter marks another step forward in our integration agenda. We addressed legacy risks and advanced the client migration in the Swiss booking center, all while continuing to drive profitable growth across our core franchises by staying close to clients. The quarter's strong financial performance lifted our 9-month underlying return on CET1 capital to 14%.

Excluding litigation and normalizing for taxes, our return was 11%, above our full year guidance of around 10%. We look forward to updating you on our expectations for 2026 when we present our fourth quarter results early next year. With that, let's open up for questions.

[Operator Instructions] Our first question comes from Giulia Miotto from Morgan Stanley.

I have two. The first one, it seems clear that UBS is already ahead of, I guess, the plan. Two examples, cost income in Asset Management, 66% against the plan of below 70% noncore delivering ahead of expectations. So why wait for Q4 before upgrading the guidance?

And then secondly, a different topic, First Brands. I didn't see any comment this morning, but there has been extensive press coverage about the $500 million hit on the asset management client asset side. So could you please have your comments on this issue? Have you seen outflows on the back of it? Is this impacting your sale of O'Connor? Yes, any comments on this issue, please?

Thanks, Giulia, for the questions. So thanks for recognizing our progress on our plan. You're asking why wait to update the guidance. Well, clearly, it's -- as we go through our year-end planning process, which is ongoing and really critical for us, that will inform how we think about 2026 in terms of the things I mentioned in my prepared comments, for example, around integration budgets, also our gross run rate cost saves that we expect to generate, but also the outlook for each of the divisions, specifically around things like NII in our asset gathering businesses and credit loss expenses in our Swiss business.

So the planning process is ongoing, and that's the reason that we would seek to update our guidance in the fourth quarter. On the First Brands topic, so to be clear, UBS does not have balance sheet exposure to First Brands and only a small number of funds are effective. Obviously, it's always unfortunate when clients generate losses. That said, it's important to note that the most affected funds were targeted at sophisticated investors and had clear risk disclosures.

No investment guidelines were breached. It's also important to note that we've moved swiftly to inform clients of the potential performance impact. And as a priority, we're taking steps to protect clients' interests and maximize recovery through the complex bankruptcy process. You also asked Giulia, about O'Connor. As previously announced, we continue to progress with the sale of the O'Connor hedge fund business to Cantor Fitzgerald, and we're working closely together towards a first close.

The next question comes from Kian Abouhossein from JPMorgan.

The first one is regarding Wealth Management Americas. You applied for the National Charter. Can you talk about the benefits of the charter and also talk about net new asset outlook post the outflows in the third quarter that we saw in NA and adviser attrition going forward, how we should think about that?

And the second question is just coming back to the AT1 document on CS and in particular, point 6, where you talk about the write-down, how it was handled. And I recall from our conversations and public statement by the previous CEO at that time, that the AT1 write-down was prerequisite or was done before or precondition of the takeover of Credit Suisse.

So it sounded like two separate steps. whereas if I read #6, it sounds -- it was all done in one go, i.e., there was no separation, so to say. And I'm just trying to understand, was this a separate step or not in terms of writing down the AT1 and subsequent offer of UBS with CS?

Thanks, Kian, for your question. So first, on the National Charter, as Sergio mentioned, we just applied for the license just earlier in the week. The expectation there is to broaden our banking capabilities. As I've said many times in the past, expanding NII as a percentage of revenues in the U.S. business is one of our key strategic priorities to narrow the pretax margin gap to peers. We think the National Charter once we receive it, will enable us to serve our clients on a more comprehensive basis.

It will enable us to offer a suite of services on par with other banks in the U.S., including checking and savings accounts as well as an expanded set of lending products. But it's also important to emphasize, as I said also in my prepared comments, Kian, that we're very focused on expanding NII in wealth -- in our Wealth U.S. business well before, and we're taking steps to do that. We've had our fourth consecutive quarter of lending growth in the U.S. business, and we believe that our differentiated and specialized lending shelf is increasingly resonating with advisers and clients.

In terms of the NNA outlook for the U.S., as you mentioned, and of course, as I mentioned during my comments, the changes that we introduced last year, including vis-a-vis the compensation framework has led to some near-term adviser movement, but importantly, is lifting pretax margins and most importantly, enabling us to reinvest in the platform to help advisers grow their books and better serve clients. Looking ahead, while I do expect some lag effect from the movement that we've seen into next year, we do see turnover tapering, and that's supported by a healthy recruiting pipeline.

And as I mentioned on the call in my comments, a record number of advisers choosing to stay and retire at UBS. On your second question regarding point 6, I think it's important here just as we laid out to indicate and really what the most important part of this FAQ6 is that the write-down of the AT1 instruments was an integral part of the rescue package.

And that rescue transaction, so that the entirety of the rescue package or rescue transaction included things that we touched on in the paragraph above, which is quite critical. The PLB, the emergency liquidity facilities that were extended. Very importantly, the Swiss government's guarantee or loss protection agreement against losses in Credit Suisse's noncore positions, of course, and our willingness to step in. And the write-down of the AT1 instruments was an integral part of the overall rescue transaction. So hopefully, that addresses your question.

Just quickly a follow-up on the adviser side, is there any time frame you could give us where advisers should be flattening out in terms of turnover? Not exactly, but is there a time frame of first half, second half of next year? And just to follow up very briefly, was the transaction, two transactions of the acquisition? Or was it all done in one transaction, i.e., the FINMA measures and subsequent takeover?

So Kian, just to follow up on the first point. Look, as I mentioned, we're seeing turnover tapering and so we're encouraged by the trends. Next quarter, I'll come out with our net new asset guidance for the division overall and can offer more color on how I see the FA movement having an impact on our NNA expectations for 2026.

And on the -- look, on your follow-up question, the AT1 instruments, as I mentioned, was an integral part of the rescue transaction. It was part and parcel of the requirements that were necessary to inform UBS to come in and acquire Credit Suisse. So that's everything I want to say about the AT1 write-down.

The next question comes from Jeremy Sigee from BNP Paribas.

First question on Asia, phenomenal flows in the quarter. And it sounded like it was a bit of a mix of slightly one-off but also slightly underlying pickup. I just wondered if you could expand on that. Is this something that you expect to see sustained strength? Is this the beginning of a trend of improving flows from Asia?

And then the second question, very specifically on the dividend accruals from UBS AG to the group. I'm not sure if you mentioned it. I think at first half, it was about $8 billion that you'd accrued to dividend up. I wonder if you can give us an updated number at the 9-month stage.

Thanks, Jeremy. So just quickly on the second one. So the -- in 3Q, at this point, we did not accrue any additional dividends at UBS AG for upstream, which went to my comment about pacing over time the level of intercompany dividends upstream to group to manage some of the FX-driven headwinds around the leverage ratios across group entities. I would just comment that we did pay the $6.5 billion, the second tranche of the $13 billion that we accrued in the prior year just after the quarter in terms of the upstream from the parent bank to group.

On your first question in terms of Asia flows and drivers, first, thanks for recognizing the strong performance. I'm very pleased with how the unit in Asia is performing. When I look at the quarter, for sure, there was a constructive backdrop. Clients were quite engaged for sure, in terms of their willingness to engage, whether it was to hedge downside risks or still ride what they saw was a positive momentum in markets. For sure, we were seeing more APAC for APAC. So China, China Tech.

Also, the U.S. remains strong, strong traction from a U.S. investment standpoint and pretty broad-based. That's what we were seeing as well. But just in terms of what the team is delivering, really, as I commented, a lot of post-integration momentum. So the teams are now together, one platform and really demonstrating what the unit can do. So while the performance in the quarter was exceptional, my expectation for the team is that they remain engaged with clients, and we continue to perform very well in the region.

I would also call out, as I've said in the past, that what we were missing a little bit over the last couple of years from a macro perspective was monetization coming from ECM type activities, particularly IPOs. We know that the region is quite hot at the moment, and that portends upside for us as we go forward in terms of flows in APAC.

The next question comes from Flora Bocahut from Barclays.

I wanted to ask you a question on the comment you made in the report around your willingness to appeal the AT1 ruling. I just wanted to understand why you, as UBS would appeal because to my knowledge, this was only the FINMA so far.

So do you feel like you're potentially liable in this case? Why would you become a party and appeal on your side as well? And the second question is regarding the cost. You're obviously well advanced on the client migration in Switzerland. This is supposed to lead to the IT decommissioning next year and the cost/income ratio boost. Did you ever provide actually a number -- an absolute number in dollar billion of how much of a boost this would be to your cost base?

Thanks, Flora. So on the appeal, which we announced today in terms of our intention alongside FINMA, I think it's important to understand that Credit Suisse requested to join the proceeding as a party before the closing of the legal merger with UBS. And then UBS became a party to the proceeding in June of 2023 and has succeeded to Credit Suisse as a result of the acquisition.

Now why is that helpful? It's in our interest to be a party in order to ensure that our perspective on the relevant facts relating to the acquisition is considered by the court as well, and this is important to safeguard the credibility of AT1 instruments for the key role that they play in bank recovery and resolution.

Now being a party in the proceedings does not increase our potential legal exposure, but we do feel that it's important that we participate to bring to bear the best possible outcome. On the -- your cost question, I think you were asking about the contribution of technology, if I got you right, in terms of the bridge to $13 billion from where we are now. So we reported that we have now reached the $10 billion mark in terms of gross run rate cost saves. So we have $3 billion that we expect to convert to a significant part to net saves over the course of 2026 and drive to our underlying cost-income ratio target by the end of 2026.

Now my expectation is when I look out, and of course, we're fine-tuning this as part of the ongoing year-end planning process. But my expectation, as I look out over the last five quarters is that technology will make up a bit more than 1/3, let's say, close to 40% of the gross run rate cost saves of that residual $3 billion. And headcount capacity is sort of a similar level with the balance being third party and third-party costs in real estate. And from a divisional perspective, I expect 2/3 of that benefit to inure to Global Wealth Management and P&C, split 2/3, 1/3 with the balance inuring to noncore and the other core businesses.

The next question comes from Stefan Stalmann from Autonomous.

I would like to come back to the point on the AT1 write-down. You said what you also said in the FAQ document that being a party in the proceedings does not increase our potential legal liability. And in our view, there should be no liability in this matter. On which basis are you exactly saying that, I mean, you are a party of this process, isn't it?

Do you actually have an indemnity by the government to compensate for any damages that may arise out of this case? And the second question, relatively broadly a question on what you see in your U.S. business. Is there any evidence that the U.S. banks are changing their competitive behavior on the back of their additional degrees of freedom from a regulatory capital side? In particular, in Wealth Management?

Thank you, Stefan, for your questions. So in terms of on which basis we've made the conclusions, we're acting on legal advice naturally. Of course, as an accounting matter can say that we don't believe there is a liability and therefore, if there's no liabilities, there's no basis to provide. And our belief is based on the fact that we believe the write-down was in accordance with the contractual terms of the AT1 instruments and the applicable law and that FINMA's decree was lawful.

So that was the basis of our conclusion.

And no, we don't have an indemnity from the Swiss government. In terms of the question on U.S. competitive dynamics, which I guess comes off the back of the U.S. banks indicating that they have additional capital to -- and dry powder in that sense. Is that changing the competitive dynamics? Look, all we can do is control what we can control in terms of what's in the U.S. I've been clear on what we're doing from a U.S. Wealth perspective, been clear on what we're doing in terms of driving additional IB penetration and market share in the U.S. and the steps we're taking and the success that we're having.

I would say that if we're talking about balance sheet expansion that some of our peers may be able to -- and of course, I can't comment or speculate, but may be able to bring to bear on the business. All I can do is recognize that our investment bank year-on-year has broadly flat balance sheet consumption. RWAs are broadly flat in the IB and yet they've driven revenue increases in -- well into the double digits. So we continue to focus on our capital-light strategy and to execute appropriately.

The next question comes from Joseph Dickerson from Jefferies.

I've got a couple of questions and then just a clarification. If I look at your Global Wealth Management unit, so if I take GWM and I isolate the business you call Global, over the past four quarters, that's produced about $1.1 billion of pretax loss. Could you discuss what that is? And if there -- if you could effectively get that to breakeven or sell it off, which I suppose is complicated, it's quite an uplift to your group pretax.

So I'm just wondering what is in Global? What's the strategy there, et cetera? And then for Q4 on the buyback, are you -- how would you think about effectively accruing for that? Would it be whatever you plan to conditionally buy back? Or would it be part of the year or your full year buyback? I guess how to think about that? And then my point of clarification is on this AT1 matter, which is, is it not a fact that when you acquired Credit Suisse, it had no outstanding AT1 instruments?

Thanks, Joseph, for your questions. I may want clarification on the last one, again, just to be clear on what you were asking before I respond to it. But on the others, quickly, in terms of what's in divisional items in GWM, that's the integration expense is largely driving that performance that you see in that item. So we don't attribute that to the units, but just have that overall captured in GWM. So those are all the things that are effectively the cost to achieve the cost saves that will ultimately bring to bear and drive down its cost-income ratio further.

In terms of Q4 and the buyback accrual, as I said, our expectation at the moment is that whatever we determine to be the level of share buybacks that we are either committed or intend to do in 2026, we will accrue in our capital in the fourth quarter, which is in line with the capital adequacy ordinance rules in Switzerland. So that will be that. Of course, the ultimate level of what we determine is subject to all the things that I mentioned on the call, our ongoing planning process, continued successful integration steps, particularly with the Swiss platform.

And then as well, whether there's more visibility or any further visibility around the shape and timing of the capital rules here in Switzerland. So all that will inform what we come out and say we're intending to do in the fourth quarter, and that will inform the accrual. In addition, of course, our full year 2025 dividend will also be accrued in the capital.

Now can I just ask you just to -- if you wouldn't mind restating the last question?

Yes. I just wanted to clarify that at the time that you acquired Credit Suisse, at that point, Credit Suisse had no outstanding AT1 instruments.

That is correct.

The next question comes from Anke Reingen from RBC.

And the first is just a follow-up question on Joe's question about the buyback. I guess previously, you said when you published your opinion paper that with full year results, you don't expect full visibility on the regulation. I guess nothing has really changed on that aspect.

And then I guess, would you be able to sort of like announce another buyback in the course of the year once you have more clarity? Or would that be basically excluded by your sort of like approach to buybacks in 2026?

And then secondly, can you talk a bit about the integration of the Swiss operations, how that's been going? I guess there have been some press articles about some system failures. Would you think that's due to the integration? Or is it just sort of like part of the normal business? And I think you had some quite attractive deposit rates out there. Are they basically part of your Q4 NII guidance?

Thank you for the question, Anke. So I think that's -- let me maybe remind what I mentioned in the last few quarters as we were answering the question on capital returns that our capital return policies and in particularly around share buyback will not be a stop and go policy.

So as you heard from Todd, we're going to complete our current outstanding share buyback plan. And at year-end, all things being equal, we expect to accrue for share buyback to be executed during 2026. The size of the share buyback will be determined as we complete our process and as we have more visibility both on how the integration is progressing and also on any potential developments on the capital requirements topic in Switzerland.

But yes, we're going to have a share buyback in 2026, all things being equal. So, yes. I'll let -- on the integration side, Todd, you may probably may chime in. But I would say that, of course, when you go through such an enormous -- we have been migrating 40 petabytes of data, migrating 700,000 clients out of 1.2 million clients. So I think that's -- what we try to do is always try to make it as smooth as possible for everybody. I would say that so far, the vast majority of the clients that are now part of the UBS platform are happy about the migration.

Of course, you always have some kind of people not being happy, like if I ask you to move from iOS telephone to an Android or the other way around the first couple of days, maybe you are not so pleased. But I don't think that we have any major issues here. Actually, things are going pretty well, and we are now very focused on completing that. So the rest of the deposit outflows, I think that was more.

Yes, Sergio, thanks. Just to pick up, you agreed. So just to pick-up on Sergio's point, any system issue is unrelated to the client migration. In terms of -- I mean you asked sort of maybe a broader question or maybe a more specific question, but I'll answer it.

And the most important thing to remember is that we're managing our net interest income, Anke, in an environment of 0% interest rates. So I think it's fair to say that the balance sheet dynamics play quite an important role in enhancing the NII as best as we can, and you could even see that a bit in the quarter-on-quarter this quarter. So we're pricing to be competitive in the market, since where we want high-value deposits of high funding value. But I wouldn't call out anything unusual about what we're doing other than to enhance our NII wherever possible.

The next question comes from Chris Hallam from Goldman Sachs.

Just 2 quick follow-ups really from me, left. First, you mentioned that you expect to receive approval for the National Bank Charter in 2026. From the point of that approval, how do you see the time line and the quantum for the PBT margin improvement in U.S. Wealth? Just I would assume that, that's additive to the FY '26 or CET1 exit rate. So just any color there would be super helpful.

And then second, you also flagged that a prolonged U.S. government shutdown may delay U.S. capital markets activities in the fourth quarter. Could you just give us a sense of materiality on that? So I guess, if we assume that the Q2 accounts deadline is missed for potential listings, how that may impact the IB numbers for 4Q for you?

Thanks for your questions. So look, on the -- I think the important thing on the National Charter in terms of when we get it and what it means. First of all, it's been priced into our longer-term plan, since it's been something that we have been intending to do.

I think it's important to understand that -- and as I mentioned in response to an earlier question, we're very focused on building out our NII and banking capabilities in the U.S. now. And the National Charter is a natural add-on to that. This is not just a wait for that and then it's going to be transformational, but rather it's going to be part of an evolution.

And it's going to -- obviously, if we want our clients the great majority of whom are doing their banking with other banks, our peers largely in the U.S., and we want to have those clients start to bank with us. That's going to take time. So -- but we can't do it until we have the charter, the license approved. So that's going to enhance things, but I would just say it's going to take time. And we'll keep you up and give you color as to expectations. But right now, from where I sit, that's something where I'm much more focused on ensuring that we're doing the right things to drive NII expansion now and to use the charter as an enhancement to that.

In terms of the U.S. government shutdown, very difficult to frame that in a materiality context. We just wanted to flag it as a potential headwind given that if -- at some point, if the IPO calendar really does get delayed across the street, it will have ultimately an impact on ECM revenues, potentially even other capital markets revenues. So we just wanted to flag it as a risk factor that we see, but very difficult to frame in terms of materiality at this point.

The next question comes from Andrew Coombs from Citi.

If I could have one on litigation and one on net interest income. On litigation, if I look at Note 14 in your accounts, you do talk about ATA with respect to terrorist attacks in Iraq. You also talk about Madoff and Luxembourg funds in courts.

I'm sure you've seen the events with BNP Paribas with respect to Sudan and more recently seen HSBC and the Luxembourg court ruling on cash restitution on Madoff. So is there any point of comparison that you would make any similarities versus differences to the outstanding cases that you have and flag in Note 14 in your accounts?

And then completely separately, net interest income trajectory, you obviously had good growth in Q3, better than anticipated, largely seems to be due to the deposit mix and pricing, but you're then guiding to stable net interest income in Q4 again. So is there an additional headwind coming through that you're foreseeing in Q4? Is it just a function of Fed rates? What are the moving parts that mean that you are slightly more conservative on your Q4 guide versus the experience in Q3?

Yes. Thanks, Andy. So on the second question in terms of NII and the outlook, let me, first, just to maybe unpack it -- from a P&C perspective, I think there, it's pretty clear that notwithstanding the point I made to Anke around balance sheet management, the NII is going to be difficult to move out of this sort of flat trajectory with interest rates not having anywhere to go at this point.

When they move, as I've said, given the positive convexity in the curve, whether rates move up or down, that will benefit us in P&C NII. In wealth, it's always the dynamics with rates going down are always somewhat difficult to model because of the impact -- of course, we are still pushing to see continued releveraging. So we've had our third quarter of releveraging. So that's a positive trend that can help.

Also, as rates tick down low enough, then you start to see even releveraging take a much more significant uptick just given interest in the carry trade, but we're not yet seeing that at the levels at the moment. Of course, as well as rates go down, then you have some mix shift dynamics that have been favorable, but are also difficult to call, especially given the rate levels we're at.

So we think that we'll continue to manage the downward pressure on NII from lower rates. Rates are already very low on half our balance sheet, just given euro and Swiss. And as dollars come down, that will have some downward pressure on deposit NIM, but we'll continue to manage everything. And naturally, as NII is only 1/4 of GWM's revenues, of course, potentially a lower rate environment also portends favorable things around transactional activity and even potentially the recurring fees.

On look, on your litigation questions broadly, we're -- first of all, we're not going to comment on other firms' cases and do read acrosses and comment, whether on ATA or on Madoff. So we have our disclosure in the litigation note, and I would just direct you to read and form your own conclusions, but we're not going to speculate on what we don't know about other institutions' legal cases.

The next question comes from Benjamin Goy from Deutsche Bank.

2 questions remain. So first, it looks like you didn't upstream capital out of your New York or Credit Suisse international entities this quarter. But last year, you did a significant ones in Q4. So should we expect something similar this year? Maybe you can share some color on that?

And then secondly, asset quality remains rock solid. At least in the U.S. disclosure, we see that your exposure to nondeposit-taking financial institutions is quite low, but any additional details of exposure to private credit, private equity and hedge funds would be appreciated and potentially also broader thoughts on the credit concerns in the market outside of single cases.

Thanks, Benjamin. So in terms of upstreaming capital from our subsidiaries, in particular, the U.K. subsidiary, where I've guided in the past, still expectation over the rest of this year into next year. We don't control the timing. What we control is continuing to derisk the balance sheet and -- but ultimately, the timing to upstream requires regulatory's approval.

So we don't control that, but I'm still expecting that the U.K. the capital repatriations from the U.K. will happen over the near to midterm. In the U.S., and I've mentioned in the past, our expectation is to reduce the capital ratio to levels that were pre-CS levels of CET1 capital. You can see this quarter still elevated with a 2 handle in terms of CET1. We're working as well to reduce the capital levels there, and that will also result in there being upstream of capital from the U.S. to the parent bank.

I will give more color next quarter on the expectations around what I see for the full year 2026 at this stage, but we continue to work to upstream as much as we can as a function of derisking the balance sheet from the CS acquisition.

And on the second question in terms of NBFIs, look, I'm very comfortable with our on-balance sheet exposure from a credit standpoint. I think that's pretty clear, if you take from me my updates each quarter on where our balance sheet is, what it consists of cost of risk. Our NBFI counterparties are largely investment grade, strong protection in terms of collateralized positions. So I have no concerns about the broader credit environment impacting on UBS at this stage.

I'm seeing nothing that would suggest any issues beyond what I report regularly on, which is in our Swiss environment, just working through the back book from the Credit Suisse acquisition that we've been doing and bringing to you all my thoughts around the impact, say, of the ongoing and emerging trade policy effects on the -- whether the back or the front book in the Swiss business.

So those are the things that I think are relevant, and we'll continue to focus on and see no broader stress in the credit market that I would -- particularly in the private credit market that I would call out.

The last question comes from Amit Goel from Mediobanca.

2 questions from me, just follow-ups really. But 1 -- so just on the -- coming back to the U.S. wealth piece, I just really wanted to understand. I appreciate you'll give more guidance for the full year. But with then the changes to the grid to try and get a bit more attention and to kind of stabilize the flows, could we see the operating margin then again kind of decline a little bit before you look to get that improving again?

And then secondly, just on the PCB business then, I guess, in the comments then, so the deposit -- the net new deposit outflow reflected some balance sheet optimization, but I was a bit confused about then why there would be some slightly more favorable deposit offerings than being made. So just wanted to understand that a bit better. And essentially, with the outlook being a bit more cloudy for Switzerland, just curious how you're seeing the balance sheet development there going into next year?

So maybe just taking your second question first. So on the balance sheet, we continue to -- and we disclosed that continue to extend significant levels of credit to clients here in Switzerland, CHF 40 billion, very focused on that. In terms of how we're thinking about the balance sheet, the balance sheet is critical for us in our Swiss business, as I mentioned, 1, to just manage the franchise.

Now particularly post -- as we move into a post-integration state, we're going to lean in more and more on the balance sheet to help our clients and to drive NII even if the rates are not helping. So the dynamics here in Switzerland around balance sheet remain quite important to us and ensuring that we're seen as a trusted lender to our counterparties is quite critical to us and that's why we talk about the level of credit that we're extending or rolling over on a regular basis to show the levels that we're maintaining here in the Swiss market.

In terms -- just quickly on the outflow as part of the optimization, I think it's important to understand that we're also looking to maximize funding value around our deposits, and that's pretty critical, how we price and how we term out deposits, in particular, is important just to also manage some -- across the group, some of the FX-driven headwinds I've touched on that make leverage more constraining. So it's just important. It's just a tool we're using across the group to improve or increase funding value along our deposits and just to ensure that we're maximizing it in that respect.

On -- you asked about the U.S. wealth business and the changes to the grid and the impacts. I've mentioned the impacts. In terms of the outlook on the pretax margin from the changes, if I isolate the pretax margin effects from the changes that we've made, they're pretax margin accretive and they're helpful. They're supportive. And that's not just what's happened life to date, but also as we model out what we might see.

Naturally, we're working quite hard to ensure that the outflows taper, as I've said, we'll see some lag effect is likely just given the movement that we've seen and given the time that it takes before advisers are off our platform. But we're -- that remains a focus for us. So that, I would say, is pretax margin accretive in the way we see it.

And therefore, the changes to the grid that we made, by the way, this most recent year that we announced do not go backwards. They are incentivizing growth and they're resonating really well. The things that we have introduced are resonating well with advisers. So we don't see that going backwards though, because some of the things that we had changed in the year before were not things that we reinstated.

I think we have no further questions. So thank you, everyone, for joining and asking questions, and we look forward to updating you with our fourth quarter results in February. Thank you.

Hello from my side. It's a pleasure to have our next speaker up. I think it's one of the most intellectually interesting equity stories out there. And we've got the CFO of UBS, Todd Tuckner. Todd, thank you very much for joining us today. So as usual, we keep this into sort of informal Q&A. We'll go through some initial remarks, and then we'll open up for questions from the audience.

Well, a lot has happened in the last 12 months or so. To start with, maybe we can talk us through the process and the latest developments that you've seen regarding the council proposal that was presented by the Swiss Federal Council. The public consultation is still ongoing? Are you going to present your position before the end of September deadline?

Yes. Thanks, Antonio. Great to be here. Yes. So as you say, the consultation process is ongoing through the end of September, and it's the consultation process regarding the ordinance proposals, mainly having to do with DTAs and software. We do intend to publish our formal comments before the end of the month and publish them at the same time on our website. Our objective in the comments really to be quite factual and to talk about the impact and the consequences if the proposals were to be adopted as they're currently drafted. We're also assessing whether and what form we might take questions from analysts and the media in connection with our formal submission. I would also comment -- you asked about the process. So the process is on a split track.

And just yesterday, the Swiss government -- we expect really -- after the comments are received by the government and assessed, we would expect that the rules then are issued whether later this year, but much more likely early to mid next year. And we would expect that the earliest they would take effect on the ordinance side is 2027. We also think it's reasonable to expect a phase-in period on the ordinance proposals, but of course, the Federal Council will need to confirm that.

On the other side, you have the legislative proposals that really have to do with the capital backing of foreign subsidiary investments. Clear, that's going to go through the parliamentary process, which will be more complicated. We understand that there'll be a consultation process specifically on those rules that will be launched before the end of the month by the government. So there'll be a separate consultation process running on that. We don't expect those rules to take effect before 2028. And the phase-in period, at least as articulated by the government when they issued their proposals in June can extend at least 6 years, if not further out.

That's very clear. So we talked about the process. Of course, UBS was asked to hold as much as $24 billion in additional capital at the parent bank, which is, of course, a significant cost. I mean, a lose-lose scenario for yourself and Switzerland. Maybe talk us to the implications that these capital measures will have for a G-SIB business like yours.

Yes. So the -- for sure, Antonio you say that the $24 billion that has been -- is a function of the proposals we view as being excessive. And also, that has to be looked at in the context of the $18 billion of additional capital that we're already addressing as part of the Credit Suisse acquisition. So it creates all told, a factual minimum capital requirement for us that would be 50% above the average regulatory floor for G-SIBs. On top, we already believe that the Swiss capital regime is among the world's most stringent, having also, among other things, the government having accelerated the implementation of Basel III final beginning of this year.

And by the way, within that, putting some provisions in there that are more conservative than we think other jurisdictions, even when they eventually get around to Basel III will put in.

The other point, I think, that's worth making is that we also see the proposals as failing to meet the Swiss government's stated objectives of being targeted, particularly around Credit Suisse's failings around the parent bank. If you look at the proposals, they particularly bite on DTAs and software at group level. So we don't see how they're targeted.

And another stated objective was to be internationally aligned and the treatment proposed for deferred tax assets arising from temporary difference, capitalized software are not aligned with jurisdictions around the world. So you asked about sort of the consequences for us. Look, if the rules were finalized as they're currently drafted, we think we'd be a pronounced outlier versus peers from a capital perspective, and it really would render any comparison to minimum requirements across G-SIBs as meaningless. And ultimately, it would just impede on our return competitiveness.

I mean that was sort of a preview of what's to come because we're looking forward to the event where you formalize your views further. Maybe just to wrap things up on the capital point. The market is obviously very keen to hear what you think you can do to reduce the impact of some of these proposed measures on both your capital position and businesses.

Yes. Naturally understood Antonio and it's important to state that we are looking at every option made available to us, for sure, all response measures are being considered, including the costs and the trade-offs of each. And so we are looking at this thoroughly. This said, it's clearly too early to speculate as to how we would respond, particularly as these rules are still very much in the formative stages, and there's still a lot of debate around the shape. And until we have more visibility around the shape and timing of the rules, it would be premature for us to talk about how we might respond and our investors understand that.

Makes sense. And of course, your commitment to stakeholders hasn't really changed throughout and you're making, I think, very strong progress in delivering on your objectives, and I think this should not be taken for granted given the size of the integration. You're almost through the plan and you provide the market with an update in Q4. Where would you say the business is delivering better so far? And where do you think you need to do a little bit more versus your projections?

Yes. So thanks, Antonio, for bringing out on the integration side. First, let me just comment on that, that all the KPIs that we've set for the integration, we think we're going to meet or beat them all when we sunset integration at the end of 2026. Just this weekend, we successfully migrated a number of former Credit Suisse clients onto the UBS platform in Switzerland. Now having transferred half of 1 million or so client files that we will have transferred by early next year. And we continue to make progress in derisking our Non-core unit, which leads to releasing capital, saving costs and also we're settling litigation matters.

We're also hard at work in streamlining the legal entity structure that we inherited from Credit Suisse literally hundreds of entities and in doing so, we're simplifying the organizational structure. We're taking out costs, and that's all supporting our tax planning.

From a business standpoint, I would say, without exception, all of our businesses have benefited from the acquisition of Credit Suisse in terms of integrating the value-accretive parts of Credit Suisse, and it's helped them to increase scale, to enhance their capabilities and to broaden their geographical coverage. So now as we have -- we see light at the end of the tunnel in terms of the integration, the businesses are very focused on investing for growth.

And we'll have a chance to talk a little bit more about sort of the business units in more detail. But maybe one follow-up on the integration part. Because when I think of integration, of course, I associate that with you achieving cost synergies and efficiency gains, and that's coming through. But also when I think about integration, I think about the core banking system, which is really at the heart of any bank's IT infrastructure, and that comes with a large share of integration risk inevitably. Now you've been migrating something like 1 million clients and 95 petabytes of data, which is a ridiculous amount of 1 billion of A4 pages if I think of 1 petabyte is 500 billion of A4 pages, I mean, just for the context. I mean this last quarter alone, you've transferred something like 1/3 of your Swiss clients that you've targeted.

Now a half as of this week.

Now a half, so maybe you can give us a little bit more of an update on where this process stands. And obviously, the market is expecting large cost savings coming through.

Yes. For sure. So we've been working towards $13 billion gross cost saves by the end of 2026 as well as underlying cost income ratio below 70%. Each quarter, I come out and report on our progress against those targets. The client migration work is an important catalyst, so is derisking Non-core, as I mentioned. Both of those have been and are big catalysts to cost saves.

You mentioned the tech piece. Tech decommissioning is, for us, the biggest capacity unlock. And for us, the Swiss platform is by far the biggest. And so as you mentioned, once this -- once the client migration is complete early next year, then we get at the hard work of decommissioning. And what I mean by decommissioning, you take the platform down, but that also means you take down software applications. You get to shutter hardware data centers and you unlock a lot of staff capacity. So by the end of 2026, we will have been done with the decommissioning of the Swiss platform, and that will unlock significant cost saves, particularly for Global Wealth Management and our Personal & Corporate Banking business in Switzerland.

And maybe let's move on to talk about the business units, and we can start with -- I think with the Investment Banking business, I mean, capital markets seem to be back. What's the outlook as you look ahead for your IB?

So first, I'd just say the IB is a great example of a business that has benefited from the Credit Suisse acquisition in terms of taking on the value-accretive parts, and you see that across markets and banking, but also including research. The IB as well has made significant investments in capabilities, technology and talent, and that's paying off. So we have a really top flight IB in APAC, in the EU, in the U.K. and in Switzerland. And we've really strengthened our presence in the Americas. And the fact that the IB is very focused on supporting our Global Wealth Management clients has really been a differentiator in terms of revenue generation as well.

In terms of outlook, markets continues to perform well, notwithstanding more normalized levels of activity and volatility in quarter-to-date, in particular versus the prior year quarter, which for us was, by the way, a record third quarter for the Investment Bank. And in Banking, we're tracking ahead of the global fee pool, which is up around 15% year-on-year and owing to more positive market sentiment, certainly more so than we've seen in the first half of 2025.

That's very good. And maybe a word on the Swiss business because obviously, Switzerland lies on a flat curve with run rates at 0, which is possibly the worst outcome for your P&C profitability, not high enough to preserve deposit margins and not low enough to sustain your non-NII, your loan origination. Now the good news is that, of course, you can't get much worse than that, and you've been able to defend profitability despite these macro headwinds. So what's the outlook for your P&C business going forward?

Yes. Look, the Swiss business has been remarkably resilient when you consider the interest rate environment you mentioned, but also economic sluggishness in Switzerland and a number of the export -- neighboring export markets. Also, the business has been appropriately focused on the client migration that we have been talking about, which adds an element of distraction to the business and to management. Add on top of that the fact that the business has had to inherit a significant credit book from Credit Suisse, which has thrown off more than its fair share of credit loss expense since it's been -- since we inherited it. We've been working through that back book. And by the end of next year, we should really see the credit loss expenses relating to the Credit Suisse exposures, really tapering.

That said, of course, though, as the back book risk tapers we're now dealing with tariffs, which we, of course, have to actively manage and monitor as well. In terms of the outlook, look, the way I think about this is by early next year, and let's see if the macro backdrop in Switzerland improves. But in any event, the migration is going to be done. So the business could be on their front foot with their enlarged client base on one platform and really focus on driving productivity, efficiency and ultimately, growth.

You mentioned NII, which is, as you say, Antonio, has troughed, which is to say that if rates go up or down from here, it will benefit NII. Of course, we have to continue to actively, as I said, manage and monitor the credit risk situation, not least given the ongoing tariff situation.

Yes. Tariffs were clearly a surprise. Maybe we'll talk about that later. But we can move on to discuss Wealth, which is sort of over 50% of your group revenues. Maybe let's start with a big picture question first. I mean, what opportunities and challenges do you see ahead for the Wealth Management industry?

That's a great question. I'm glad you bring up trends in Wealth because that's obviously something we're very focused on. So I would say the trends in Wealth are really threefold that we're seeing across the industry. So first, I bucket together wealth migration, market diversification and multi-shoring. And that's invited by geopolitical issues, market dynamics, but also tax planning and also lifestyle and mobility. So we're clearly seeing those things, particularly for our wealthiest clients.

The other trend, I'd say that's quite apparent is intergenerational wealth transfer, particularly when you consider the stunning amount of accumulated wealth by investors who are at least the 75 years of age. And then I guess the third one I would identify is sort of next-gen wealth tech digital assets for the digital savvy and with it, the democratization of investment products. And I think if you step back and consider those trends, they offer tremendous upside for incumbents, but also very significant risks because they also invite significant upside for new entrants, new players, disruptors, digital disruptors. So the upside is great. The downside is equally as great, I would say.

At our -- at UBS and Global Wealth, we get what's at stake for sure. And we are very focused on investing to leverage the trends and reap the upside, but also very clear to manage our downside risks.

Very clear. Maybe let's move on to discuss the sort of the U.S., which is your single largest wealth market. Now you've been making progress when it comes to pretax profit margin this last quarter. And what do you see as the sort of key drivers of U.S. growth from now on? And maybe if I may, on -- to add, the vision that you and Sergio have of UBS is, of course, a business where the global platform is a point of strength and not vice versa. However, increasingly, the market is wondering also on the back of the capital discussions, if you're the best owner of that U.S. business. What's your take on that?

Yes. So maybe let's unpack that complex question about the U.S. So thanks for recognizing the profit improvement. Look, I've said since we laid out the various elements that we need to improve upon in order to narrow the pretax margin gap with peers. We have to do all of them, well, improve on all of the elements that I laid out most recently in detail in our investor update in 4Q. Without there being one -- particular one that we have to do better than the rest. We have to chip away at all the elements, and we're doing that, and we're making progress. If there were one differentiator, though, that I would call out for the Wealth U.S. business, it is banking penetration.

If you look at our NII as a percentage of total revenues, we're around 10 points away from the -- our peer set average. And that ultimately is such a huge driver of pretax margin growth is improving NII. Why is that? Just because under the wirehouse model, NII is compensable at a lower level to the advisers than some of the other items of income. So getting banking right is super important. We get that. We understand that. We're investing a lot in our banking capabilities and securing the national charter is a big step on that journey.

You mentioned sort of global connectivity, which I believe is a strategic advantage for UBS. The fact that we offer multi-shoring capabilities where we can seamlessly offer clients who want to book across multiple jurisdictions. So I do believe that, that is an important element for us and offers an important strategic advantage, not least given the secular trends I mentioned before, including the acceleration of wealth mobility. And then lastly, I'd say, look, the U.S. is the biggest wealth market in the world. And as a result, it is fundamental to our growth strategy. It is also foundational to what makes us special, having a truly global wealth offering worldwide. I'm confident that we will continue to improve pretax margins along with our ambition and over time, continue to invest in the business and narrow the gap versus peers.

Very good to hear, actually. I think you made some interesting points. If I look at sort of Asia, which is your wealth market, which is facing -- it's your engine really with USD 750 billion of invested assets, there's been positive momentum in APAC and macro and global trade has been a driver of investor sentiment, of course. And what are you seeing on the ground in terms of activity levels?

Yes. So continue to see very good client momentum in Asia. The markets are doing well. If I can summarize that across that massive geography. But in general, there's a lot of positive momentum. Look, in terms of how we think about this going forward, we intend to leverage our #1 Wealth business, in APAC to accelerate growth. So how are we thinking about this? We want to expand beyond the traditional markets of unrivaled strength for us, Hong Kong and Singapore and expand into strategic growth markets Taiwan, India, Australia, also onshore China. And we want to penetrate those markets in a few ways.

One, we want to clearly improve the share of wallet that we have with clients. Secondly, we want to accelerate strategic partnerships. So we announced one recently with -- in India. We have one in Japan. So those strategic partnerships are quite important to get a foothold in markets where we are less dominant. And third, I would say, it's important that we're going to ramp up impact hiring of client advisers across these markets.

All right. We got about 15 minutes to go, I'm going to ask you one last question, and then we'll test the audience to see if there is any questions from the floor. We've obviously talked about the capital debate. And I think you've made it very clear that you remain committed to deliver shareholder distribution for this year and then how we should think about the way you deploy the capital you generate or repatriate going forward between especially sort of distribution, double leverage or any other potential use. Maybe you can talk about those options a bit further.

Sure. So Antonio, as you know, I mean, we're a highly capital-generative firm. And the way if you think about before Credit Suisse, before the acquisition, the way we thought about it was we intended to return pre-Credit Suisse levels of shareholder returns by 2026. And the way -- the assumptions that we made in doing that was that we were going to upstream earnings from subsidiaries and to use those to fund capital returns and therefore, maintain an equity double leverage ratio where we were pre-Credit Suisse of around 100%. Until we have more visibility on the shape and timing of the capital rules and as this debate takes shape, again, that remains our sort of ingoing assumption for how we would fund capital returns going forward.

Thanks, Todd. All right. We're going to now open up for questions from the audience. I see one there in the middle.

Two questions, please. The first one, historically strong Investment Banking activity has been a good driver of net new money growth in the Wealth Management business. Is there any reason why this cycle, the dynamic there should be any different to what happened in the past? And then the second question is in the U.S. Wealth Management business. Could you talk a little bit about your latest thinking on broadening the client acquisition funnel perhaps producing the dependency and the relationship managers there and finding other ways to bring people into the [indiscernible]?

Yes. So in terms of net new asset growth, the we've had an objective for both 2024 and 2025 of $100 billion in net new assets. I'm -- we're on track in '25. In '24, we broadly met that objective in '25. We're on track to meet that objective. We have said we intend to grow net new assets to $200 billion by 2028. So from '26 to '28, now we should see more accretion around that.

The reason '24 and '25 were -- there were puts and takes was really having to do with the Credit Suisse acquisition. We knew that we had to do a whole series of balance sheet optimization work. We had to look at the credit exposures that we had as they were maturing. We had to ensure that we were using the balance sheet appropriately and efficiently. And we also, as I was been reporting the last several quarters, we had a big win-back campaign after Credit Suisse, where there was an outflow of near $200 billion of deposits. And it was important to sort of bring back and stabilize -- clearly stabilize the deposit base.

And then as those assets have started to mature our liabilities, of course, as they started to mature, then in many cases, we had to manage keeping those maturing deposits on our platform as opposed to seeing clients move to other banks in order to get similar levels -- similar rate levels just given we were we were paying attractive levels that were above where we would normally pay and once things have stabilized.

So there were a number of sort of competing factors that sought to offset the growth and momentum that we had in net new assets. But as we continue to just make progress on the integration, we see less and less of that as a headwind and therefore, want to get to the sort of $200 billion level, which would be around 4% net new asset growth by 2028.

In terms of feeder channels, it's an excellent question and something we focus on. Clearly, at the moment, for us, our most -- the most predominant feeder channel we have or acquisition channel funnel, as you say, are the advisers themselves. And so ensuring that we're able to attract advisers but to also incentivize our current bench of advisers to grow is super important. And we've been making a lot of efforts and inroads to ensure that happens.

Banking is another important feeder channel and something I mentioned we have to improve upon the more that the relationship gets institutionalized and broadens the better in terms of being able to attract more and more assets and keep the relationship sticky, and that's important.

Workplace Wealth is another area where we're significantly investing. We believe that we are particularly well positioned to grow that as an asset channel. So where clients are -- they have, say, comp plans that vest -- and then where the administrator over those comp plans and then we're able to advise on those vested share awards and potentially take on new clients that way and bring in new assets under management. So those are all important things that we're very focused on to improve the acquisition funnel and to continue to ensure that overall, we're able to meet our net new asset growth target of $200 billion by 2028.

Maybe I'll follow up on Ian's question actually, because if I look at your disclosure, I think a sizable number of advisers seem to have left this year, especially mainly out of the U.S. Is it something we should worry about?

Look, the -- first of all, when you look at equity valuation levels and when they're running at all-time highs, that's always a big catalyst for movement of advisers across firms. And we're seeing that elevated levels across the street as advisers seek to monetize their books of business. we're seeing that at our own shop as well, but also some of the changes that we introduced at the end of last year are contributing to some additional movement to other firms and to the independent channel.

This said, we're actively recruiting, and we're also seeing more advisers commit to stay and retired UBS in any time since we introduced that particular program -- retention program, which is working quite well. So look, we're going to work through some of the some of the more elevated levels of attrition that we're seeing across the market and that we're also seeing at our shop as well.

Any questions from the audience for Todd? I think we probably covered. Maybe a couple more, if I may. Just you've touched earlier on sort of U.S. tariffs and the levels for Switzerland, which came well, that's a big surprise even a shock, we can say. Can you talk a little bit more about sort of how this is impacting your clients and your business?

Well, I think it's too early to call on that. I mean -- and also, of course, to see where ultimately does the level change is still something to watch. But I think general Swiss companies have a fair bit of optionality, and they're pretty resilient in this area, in particular, when it comes to U.S. tariffs because many have manufacturing facilities in the U.S. So there might be ways that they can hedge against the significant tariff levels.

They also have global access to potentially even redirect some of their sales efforts. So it's a particularly resilient set of corporates within the various industries that Switzerland does quite well that could be impacted by tariffs. But it's clearly an area that we have to watch. I mean if there is prolonged high tariffs over a period, one could reasonably expect that they can have an impact, of course, on the credit health of corporates and ultimately could impact on the credit exposures that a bank like UBS would have.

No, I realize you will present a plan and I think we should wait for that plan before you sort of provide the market with a full picture around what is the real normal on ambition levels when it comes to net flows, but we are approaching the end of the integration process and every time you speak, in making a step in the right direction. And how far are we to reaching the $200 billion net flow ambition? And do you think that it's still the normalized level that you can sustain going forward?

Yes. Antonio, as Ian asked, I mean I would just reiterate that we're on track in terms of our 2025 ambition of $100 billion of net new assets. We still maintain as an ambition to grow to $200 billion by 2028. I will come back in the fourth quarter of '25 early next year and offer as part of our investor update a view on how that trajectory is looking and what are the steps that we're taking and what are the drivers around that, so that detail will come.

Maybe just one follow-up and we're going to take advantage of you being with us today, but can you talk a little bit more about sort of the impact of output floors on sort of the levels of capital that you will have to hold, and are there any other potential mitigants that you can implement?

Yes. So we're currently operating unconstrained by the output floor. Of course, the output floor itself will increase to 72.5% by 2028. We have disclosed that we think all other things being equal, that the output floor would start to become constraining by 2028. But we're hard at work to mitigate the output flow where we can, and we'll continue to update the market on how we're progressing along those mitigation options.

Thank you, Todd. I think that completes my questions. I think we've covered a lot of ground. So I want to thank you very much for joining us today, and thanks, everyone, for listening.

Thank you very much.