UBS (UBS) Q3 2026 Earnings Call Transcript

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DATE

Wed, Oct. 28, 2026

CALL PARTICIPANTS

• Group CEO - Sergio Ermotti
• Investor Relations - Sarah Mackey
• Todd Tuckner

TAKEAWAYS

• Reported Net Profit -- $2.7 billion, which includes $452 million in integration-related expenses and a $346 million charge for debt repurchases.
• Underlying Pre-tax Profit -- $4.1 billion, increasing 14% year over year as total revenues outpaced expense growth.
• Non-GAAP EPS -- $0.85 for the third quarter.
• Global Wealth Management Pre-tax Profit -- $2 billion, representing 11% year-over-year growth driven by double-digit profit increases across all regions.
• Net New Assets -- $55 billion in Global Wealth Management, reflecting a 4.5% growth rate led by momentum in the Americas and Asia Pacific.
• Investment Bank Pre-tax Profit -- $854 million, increasing 9% year over year and delivering an 18% pre-tax return on equity.
• Global Markets Revenue -- $2.5 billion, representing a 17% increase to a third-quarter record behind broad-based strength in the equities franchise.
• Personal & Corporate Banking Pre-tax Profit -- CHF 813 million, rising 22% year over year as the division captured cost efficiencies from the Swiss platform migration.
• Gross Cost Reductions -- $13.2 billion achieved since the 2022 baseline, with the company expecting to reach $13.7 billion by year-end.
• CET1 Capital Ratio -- 14.7% at the end of September, with management targeting a ratio of approximately 14% by the end of 2026.
• Share Repurchases -- $4.8 billion year-to-date, with an additional $1.2 billion in buybacks planned for the fourth quarter.
• Total Headcount -- 110,000, which is 2% lower sequentially and 30% below the 2022 baseline levels.
• Global Banking Revenue -- $670 million, a 21% decrease year over year due to lower sponsor activity and transaction timing in advisory.
• Net New Fee-Generating Assets -- $13 billion in GWM, reflecting continued demand for discretionary mandates and alternatives.
• Asset Management Pre-tax Profit -- $300 million, increasing 6% year over year as operating efficiency improved.
• Group Cost-Income Ratio -- 68.7% on an underlying basis, with the year-to-date ratio standing at 70%.
• Credit Loss Expense -- $114 million for the quarter, corresponding to an annualized cost of risk of 7 basis points.
• Total Assets -- $1.7 trillion on the balance sheet as of Sept. 30, 2026.
• Net Stable Funding Ratio -- 115% at quarter end, while the Liquidity Coverage Ratio was 179%.
• CET1 Leverage Ratio -- 4.6%, as leverage exposure decreased by $59 billion sequentially due to lower asset levels and currency translation.
• Non-core and Legacy Pre-tax Profit -- $360 million, primarily driven by legal settlement income that offset $275 million in litigation charges.
• Unified Global Alternatives New Commitments -- $12.5 billion in record quarterly commitments, bringing total invested assets in the segment to $371 billion.
• Dividend Accrual -- $2.8 billion year-to-date, supporting the company's capital return ambitions.
• GWM Net Interest Income -- $1.8 billion, rising 8% year over year due to higher deposit margins and loan growth.

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RISKS

• Sergio Ermotti stated, "September's outcome in the Upper House is very concerning," noting that proposed Swiss capital requirements would excessively tighten regulations and could impact the long-term competitive position of the firm.
• Todd Tuckner noted that "deterioration in credit conditions, higher bond yields, and renewed inflation concerns" have led to more defensive positioning among clients as they enter the fourth quarter.

SUMMARY

UBS Group AG (NYSE:UBS) management reported progress in the final stages of the Credit Suisse integration, having decommissioned 90% of legacy applications while surpassing its original cost-reduction targets. The company reported underlying pre-tax profit growth across all business divisions, specifically highlighting record global markets performance in the Investment Bank and strong net new asset inflows in Global Wealth Management. CFO Todd Tuckner indicated that the firm is transitioning from synergy capture to maintaining a structurally efficient cost base, supported by the recent migration of clients to a single platform in Switzerland. Management also detailed strategic priorities in the U.S. market following the acquisition of a National Bank charter and addressed ongoing regulatory discussions regarding Swiss capital requirements.

• Sergio Ermotti stated, "Nearly all legacy applications are no longer in use, with 90% fully decommissioned," as the integration program enters its final quarter.
• The company plans to roll out its first incremental array of banking capabilities in the U.S. during 2027 to leverage its recently obtained National Bank charter.
• Operational efficiency in Asia Pacific resulted in year-to-date pre-tax profit margins of nearly 50% through the implementation of a "One Bank" integrated service model.
• Management expects to execute $1.2 billion in share repurchases over the next three months, which will complete the current authorized program.
• UBS was recognized as a global leader in the 2026 Evident AI Index for responsible AI and talent development, reflecting ongoing technology investments.
• The company expects low single-digit sequential growth in Global Wealth Management net interest income for the fourth quarter, supported by higher interest rates and lending growth.

INDUSTRY GLOSSARY

• CET1: Common Equity Tier 1 capital, a primary measure of a bank's capital strength used by regulators.
• NNA: Net New Assets, the total value of new assets brought in by clients less any assets withdrawn.
• NNFGA: Net New Fee-Generating Assets, assets that are placed into investment products that generate recurring fees for the bank.
• NSFR: Net Stable Funding Ratio, a liquidity standard requiring banks to maintain stable funding against their long-term assets.
• LCR: Liquidity Coverage Ratio, a requirement that banks hold enough high-quality liquid assets to cover cash outflows during a 30-day stress scenario.
• Unified Global Alternatives (UGA): A UBS strategy that provides wealth management and asset management clients access to private markets and hedge funds.
• One Bank: An internal strategy to provide clients with a seamless range of services across different business divisions.
• DTA: Deferred Tax Assets, which can be used to reduce future tax liabilities.

Full Conference Call Transcript

Operator: Ladies and gentlemen, good morning. Welcome to the UBS third quarter 2026 results. The conference must not be recorded for publication or broadcast. Analysts can register for questions at any time by pressing star and one on the telephone. Media representatives are invited to join this call in listen-only mode. Should you need operator assistance, please press star and zero. At this time, it is my pleasure to hand over to Sarah Mackey, UBS Investor Relations. Please go ahead, madam.

Sarah Mackey: 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 two, you can see our agenda for today. It is now my pleasure to hand over to Sergio Ermotti, Group CEO.

Sergio Ermotti: Thank you, Sarah, and good morning, everyone. In an increasingly complex market environment, our strong third quarter performance once again demonstrated the benefits of our diversified global business model and disciplined execution. We remain focused on what we could control, deepening client relationships, prudently managing resources and risks, and finalizing the integration of Credit Suisse while delivering on our related financial ambitions. With a year-to-date return on CET1 capital of 17%, we are increasingly confident in our ability to outperform our 2026 exit rate return target. We remain on track to achieve our exit rate cost-income ratio target of less than 70%. Our global diversification remains a key source of strength and momentum.

In APAC, our One Bank approach is driving year-to-date pre-tax profit margins towards 50%. In the U.S., our strategic investments continue to translate into consistently higher levels of profitability and growth. In Switzerland, the value clients place in our local and global capabilities is increasingly evident in our results, and we granted or renewed around CHF 40 billion of loans to businesses and households. Meanwhile, in EMEA, our enhanced scale is translating into stronger operating leverage in the region. More broadly, the breadth and depth of our offering allowed us to attract $55 billion of inflows in Global Wealth Management. We also saw record demand for our Unified Global Alternatives strategies, further bolstering our scale and growth momentum.

In the Investment Bank, we improved on our already best-in-class efficiency with record third-quarter performance reflecting the strength of our equities franchise and our ability to capture high return opportunities, particularly in Asia. As we enter the fourth quarter, investor sentiments remain measured amid elevated macroeconomic volatility, ongoing geopolitical tensions, and political uncertainty with consequential elections, including in the U.S. Against this backdrop, we are staying close to clients to help them navigate market conditions and capture opportunities. Our profitability and balance sheet for all seasons gives us the capacity to do this while also delivering on our capital return plans. We have repurchased $4.8 billion of shares and accrued $2.8 billion for our dividend year-to-date.

We have already achieved the ambition we set early in the integration journey for 2026, with total capital returns now to exceed pre-acquisition levels. Over the next three months, we intend to repurchase $1.2 billion of shares, completing our current program. As usual, we will outline our capital return plans for 2027 with our fourth quarter results. Turning to the integration of Credit Suisse, we are in the last mile, and the finish line is in sight. Nearly all legacy applications are no longer in use, with 90% fully decommissioned, and as said, we are close to achieving our related financial ambitions.

Of all we have accomplished over the last three years, I remain very proud of how our people come together under a common culture and vision. Our recent employee survey results continue to exceed financial services benchmarks across all comparable measures, with overall sentiment remaining strong and broadly consistent across UBS and former Credit Suisse employees. That sense of shared purpose has been a driving force behind our success. More importantly, it gives me confidence that we can continue to evolve as a firm and unlock the growth opportunities that lie ahead. Increasingly, technology and AI are amplifying the ability of our people to serve clients and operate as a more integrated firm.

Our progress was recently validated by the 2026 Evident AI Index, with UBS recognized as the global leader in responsible AI and talent development in banking. Of course, another defining factor for the future of UBS is the ongoing parliamentary process related to banking regulation in Switzerland. I am convinced that, as was the case in March 2023, we are once again in a critical juncture where the course for the coming decades will be set for the Swiss Financial Center. September's outcome in the Upper House is very concerning. We have made every effort to engage and contribute constructively to create a basis for a truly democratic process.

Our goal has been and remains to reach a solution that balances financial stability, taxpayer protection, and competitiveness. Unfortunately, the latest proposal on the table also fails to achieve that balance. It continues to disregard the serious concerns raised by the overwhelming majority of respondents to the consultation and would excessively tighten capital requirements that are already among the most stringent globally. Just as troubling is the failure to consider the consequences for our shareholders, who remain the first line of defense in periods of stress, and whose critical financial support during the acquisition helped protect Switzerland's reputation and financial stability.

We will continue to engage constructively in the hope that the Parliament will reach a solution that supports the country financial stability without imposing undue cost on UBS's shareholders, clients, and employees, and without impacting its long-term competitive position. The ongoing debate is generating considerable attention, leading to a lot of speculation, opinions, and requests for clarification from all of our stakeholders. We do not intend to address everything, but on one topic, we want to be very clear. For UBS, the top priority is to protect the long-term interests of our shareholders, clients, and employees around the world.

In a very competitive environment, it is essential to be able to continue to grow sustainably while remaining strategically committed to our diversified business model and our global and regional footprint, which allow us to create value for all of our stakeholders. After more than three years of disciplined execution, we are on track to complete the integration by year-end and have strong momentum across our businesses. With that, let me hand over to Todd.

Todd Tuckner: Thank you, Sergio, and good morning, everyone. In the third quarter, we delivered reported net profit of $2.7 billion and earnings per share of $0.85. On an underlying basis, our pre-tax profit was $4.1 billion, up 14%, with a return on CET1 capital of 16.7% and a cost-income ratio of 68.7%. Total revenues increased 10%, outpacing expense growth. Within our core franchises, excluding litigation, we delivered four points of positive operating leverage on 3% higher revenues and lower costs. Moving to slide six. This quarter's strong performance was underpinned by year-on-year profit growth in each of our businesses, alongside continued progress on the integration, now in its final stages.

Reported results included integration costs of $452 million and a charge of $346 million from the repurchase of around $10 billion of high-cost Credit Suisse liabilities. The debt repurchase accelerates the reduction of the funding drag in Non-core and Legacy, while also supporting net interest income in GWM and P&C going forward. The effective tax rate in the quarter was 24.7%, slightly elevated as the legal provisions recorded in NCL are not expected to result in a tax benefit. Turning to our cost update on slide seven.

With $13.2 billion of gross cost reductions already delivered, including $0.6 billion in the third quarter, we expect to deliver $0.5 billion more in the fourth quarter, bringing the total to around $13.7 billion, above our $13.5 billion ambition. Accelerated delivery of integration milestones has enabled us to identify additional synergies supporting this expected outperformance. Capturing these opportunities entails additional costs. As we complete the program at year-end, we expect around $0.5 billion of integration-related expenses in the fourth quarter, bringing the final cost to achieve multiple to around 1.1x at historical FX rates, in line with guidance and a strong outcome given the integration scale and complexity.

Total headcount at quarter end was 110,000, 2% lower sequentially and 30% below our 2022 baseline. Similarly, over the same period, we've reduced the group's operating expenses by almost 30% when excluding litigation, variable compensation, and currency effects. As the integration program concludes, our focus shifts from capturing related synergies to sustaining both a structurally efficient cost base and disciplined resource allocation. Together, these generate capacity for growth and attractive capital returns to shareholders. Turning to slide eight. As of the end of September, our balance sheet for all seasons consisted of $1.7 trillion in total assets.

Loan balances and deposits were down 1% sequentially, as positive net new lending and deposit flows across GWM and P&C were more than offset by FX translation. Credit-impaired exposures remained at 1%, while group credit loss expense was $114 million, corresponding to an annualized cost of risk of 7 basis points, unchanged from the prior quarter. Tangible book value per share increased slightly sequentially as profit in the quarter was largely offset by net charges in OCI and share repurchases. Overall, we continue to maintain a strong and resilient balance sheet with total loss-absorbing capacity of $187 billion, a net stable funding ratio of 115%, and an LCR of 179%. Turning to slide nine.

Our CET1 capital ratio at the end of September was 14.7%, and our CET1 leverage ratio was 4.6%. Our Common Equity Tier 1 capital increased by $0.7 billion in the quarter, as earnings generation was partly offset by dividend accruals, reserves for share award hedges, and currency effects. Risk-weighted assets and leverage exposure decreased sequentially by $8 billion and $59 billion, respectively, reflecting lower asset levels and FX translation. Looking ahead, we expect to end 2026 with a CET1 capital ratio at or very close to our target of around 14%, including a potential accrual for the initial portion of intended 2027 share buybacks.

As Sergio mentioned, next quarter we will update our capital return ambitions for 2027 as part of our strategic update. UBS AG standalone fully applied CET1 capital ratio at quarter end increased modestly to 14.5%, as Q3 earnings and the effect of lower RWA were largely offset by a dividend accrual of $1.8 billion. Turning to our business divisions and starting on slide 10 with Global Wealth Management. GWM delivered a pre-tax profit of $2 billion, up 11%. Excluding nearly $200 million of litigation-related releases that benefited the prior year quarter, pre-tax profit increased by 25%, with double-digit growth across all regions.

Clients are increasingly turning to UBS for our advice and global capabilities and entrusting us with more of their wealth. Net new assets were $55 billion, representing a 4.5% growth rate and bringing year-to-date NNA to $128 billion. Momentum was broad-based across regions led by APAC and the Americas. Invested assets increased 1% sequentially as flow performance was offset by FX translation. At the same time, demand for our CIO-led solutions remained strong, driving $13 billion of net new fee-generating assets in the quarter, with momentum across our My Way discretionary mandates, U.S. advisory, and alternatives. Client activity also supported $6 billion of net new loans in the quarter, driven by securities-based lending.

We attracted $2 billion of net new deposits with inflows into fixed-term instruments, more than offsetting outflows from current accounts. Moving to our regions. In the Americas, we continue to execute with discipline against our strategic priorities, delivering further improvements in profitability and growth. Pre-tax profit increased by 28%, with a profit margin of 16%, up more than 2 percentage points, supported by record revenues. During the quarter, we added $17 billion of net new assets, driven by strong same-store performance. Net new loans were $4 billion, reflecting investments to strengthen our banking capabilities and extending the region's run of positive quarterly lending growth.

In Asia Pacific, we delivered pre-tax profit growth of 19% and a profit margin of 45%, while expanding our client advisor team and investing in capabilities across priority markets and client segments. Net new assets and net new fee-generating assets grew at annualized rates of 9% and 8%, respectively. Over 20 billion of NNFGA over the past 12 months drove a 20% increase in recurring revenues. These results demonstrate how deeper mandate penetration, stronger portfolio construction, and a broader offering are improving client outcomes and further strengthening the durability of our revenues across GWM, and particularly in Asia Pacific.

Excluding litigation, EMEA increased pre-tax profit by 39%, benefiting from 13 percentage points of positive operating leverage and delivering a profit margin of 37%. The region also generated $9 billion of net new assets, reflecting solid underlying business momentum and the growing benefits of our fully integrated platform following the completion of the client account migration earlier this year. The benefits of the Swiss platform migration are particularly evident in our wealth franchise in Switzerland, where pre-tax profit excluding litigation increased 34%, reflecting broad-based growth across revenue lines and disciplined cost management. The Swiss team also maintained strong momentum in attracting client assets, generating $12 billion of NNA in the quarter, equivalent to 5% annualized growth.

Turning to divisional revenues, which increased by 8%. Recurring net fee income grew by 9% to $3.8 billion on positive market performance and over $70 billion of net new fee-generating assets over the past 12 months. Transaction-based income increased by 4% to $1.3 billion, supported by demand for structured products and wealth planning. In the Americas, transactional revenues were 11% higher, reflecting strong client engagement and continued collaboration with the Investment Bank. While APAC delivered 2% growth against an exceptional prior year quarter. Net interest income of $1.8 billion rose 8% year-over-year and was modestly up over the prior quarter. Sequentially, higher deposit margins and loan volumes were broadly offset by current account shifts into fixed-term deposits.

For the fourth quarter, we expect higher rates and lending growth to support a low single-digit sequential increase in GWM net interest income, also accounting for modest deposit mix effects. Operating expenses rose by 6%. When excluding variable compensation, litigation, and currency effects, costs declined by 4%. Turning to Personal & Corporate Banking on slide 11. P&C delivered its strongest quarter since the acquisition with pre-tax profit of CHF 813 million, up 22%, and an underlying pre-tax return on equity above 18%. With all clients now on a single platform and substantial progress in retiring legacy infrastructure, we're capturing meaningful cost efficiencies.

The completion of client migrations earlier this year has also freed up capacity for P&C to deepen client relationships and capture market share. As a result, we saw strong momentum across the franchise. We attracted net new clients, grew both loans and deposits, and generated annualized net new investment product growth of 7%. This supported a 4% increase in revenues, while disciplined execution converted that momentum into 9 points of positive operating leverage. Despite the continued zero interest rate environment, net interest income was 2% higher year-on-year and 3% higher sequentially, driven by strong lending momentum. For the fourth quarter, we expect P&C net interest income in Swiss franc terms to increase slightly, supported by continued balance sheet growth.

Non-interest revenues increased 5%, driven by personal banking, which benefited from higher custody, mandate, and card fees. In corporate and institutional clients, strength in payments and trade finance offset softer syndicated finance activity, although the pipeline remains strong. Net credit loss expense was CHF 27 million, as charges on non-performing loans were partly offset by model releases on the performing portfolio, reflecting the resilience of our Swiss corporate loan book amid macroeconomic uncertainty. For the fourth quarter, assuming the Swiss credit outlook remains constructive, we expect further model releases to partly offset seasonally higher Stage 3 charges. Operating expenses declined 5%, driven by continued synergy realization.

Turning to slide 12, Asset Management delivered pre-tax profit of $300 million, up 6%, and a cost-income ratio of 62%, reflecting improved operating efficiency and continued growth in our priority initiatives. Excluding the O'Connor exit, total revenues and management fees were broadly stable. Net new money was -$5 billion, reflecting money market outflows and institutional portfolio rebalancing following the recent completion of our custody platform consolidation. This was partly offset by positive flows into ETFs, SMAs, and Unified Global Alternatives. Within UGA, we attracted a record $12.5 billion of quarterly new commitments across GWM and Asset Management, bringing invested assets to $371 billion and demonstrating the strength of our integrated distribution model.

Operating expenses declined 14%, or 11% excluding O'Connor, reflecting continued benefits from our platform investments. We expect the exit to have a broadly similar impact on the Q4 revenue and cost comparison, with limited effects thereafter. Onto slide 13, the Investment Bank delivered pre-tax profit of $854 million, up 9%, and a pre-tax return on equity of 18%, combining strong earnings growth with disciplined use of capital. Global banking revenues were $670 million, down 21% against a record third quarter last year. Capital markets revenues declined 6%, outperforming the fee pool. A 44% increase in ECM was more than offset by lower LCM revenues, reflecting lower sponsor activity.

The growth in ECM, spanning all regions, reflects continued momentum in one of our core strategic priorities and strengthens our broader equities franchise. Advisory revenues declined 44% from a record prior year quarter, also reflecting transaction timing. This came amid a fee pool that remains concentrated in mega-cap transactions, where balance sheet commitment plays a more prominent role. Looking ahead, client engagement and origination remain strong across advisory and capital markets, supporting a robust pipeline. Assuming constructive market conditions, we expect this to translate into sequential growth in global banking revenues in the fourth quarter.

Global markets revenues rose 17% to a third-quarter record of $2.5 billion, with Q3 highs across APAC, the Americas, and Switzerland, and led by broad-based strength in equities. Equities grew 22%, with strong performance across financing, cash, and derivatives, supported by higher client balances, market share gains, and healthy client activity. FRC was 1% higher, with growth in FX and credit, and a gain on a strategic investment partly offset by lower rates revenues. For the fourth quarter, we expect a more typical sequential seasonal moderation in transaction volumes. In addition, a strong prior year period, which included a gain on disposal, may weigh on the year-on-year comparison. Operating expenses increased by 5%, driven by higher non-personnel costs.

On slide 14, Non-core and Legacy generated third quarter pre-tax profit of $360 million. This largely reflected continued progress in addressing legacy cases, with net income from the settlement of certain legal matters more than offsetting $275 million of litigation charges. Operating expenses excluding litigation declined 69% to $91 million, bringing cumulative cost reductions against the 2022 baseline above 90%. Building on this progress, we now expect to exit the year with around $300 million of annualized operating expenses, excluding litigation, with further reductions thereafter. Risk-weighted assets declined $0.4 billion sequentially, driven by further reductions in the credit and macro portfolios. Both costs and RWA are already below our year-end ambitions. A brief word on group items on slide 15.

The reported pre-tax loss of $740 million primarily reflects the liability management transaction discussed earlier and $265 million of own credit and hedging losses on accrual accounted positions, mainly due to the sharp rise in U.S. dollar interest rates. Excluding the temporary P&L volatility from these own credit and hedging positions, the underlying pre-tax loss was $138 million, largely related to DTA funding. To conclude, strong revenues and disciplined cost management drove a return on CET1 capital of 17% and a cost-income ratio of 70% over the first nine months, positioning us well to achieve our 2026 exit ambitions.

As the integration concludes, we're focused on building on this progress, investing in our strongest growth opportunities, and sustaining earnings growth and attractive returns for our shareholders. With that, let's open for questions.

Operator: We will now begin the Q&A session for analysts and investors. Participants are requested to use only handsets while asking a question. Anyone who has a question may press star and one at this time. The first question comes from the line of Antonio Reale from Bank of America. Please go ahead.

Antonio Reale: Hi. Morning, everyone. It's Antonio from Bank of America. I have a couple of questions, if I may please. The first one is on your latest thoughts on the capital proposal that's being currently discussed by Parliament. Of course, I've heard Sergio's remarks. There was a WAK-N meeting yesterday and the day before. There seems to be a few scenarios on the table based on what we read on the press, at least. I think you've been very clear in your views on both 90% CET1 backing and the 50/50 option. Now, what would a 75% scenario mean for UBS?

I guess the capital costs of higher requirements goes well beyond the mere billion-dollar charge, but I'm keen to hear your thoughts on this. Related to that, how do you view, and the Board of UBS view, the cost of any contingency actions here versus the potential long-term implications that higher capital requirements may have on your ability to compete as a global business? That would be my first question. Then if I may, related to net new asset growth in the U.S., we have seen a positive surprise this quarter.

What do you see as the key driver of U.S. growth now that you have a banking license and we are through what seems to be the worst part of FA departures from here? Thank you.

Todd Tuckner: Antonio, let me start with the second question. Look, we are continuing to see the benefits of our investments in the U.S. in advisors, our platform and capabilities, and the client experience as evidenced by, as I mentioned in my comments, strong same-store flows and improving advisor productivity, as well as continued accretion in our banking KPIs and normalized net recruiting metrics. Regarding the latter, as mentioned previously, there is a time lag in reported flows, headcount, and production from FA movement that could have an albeit tapering effect in our metrics. We see recruited joiners and announced leavers returning to more typical levels at UBS, including relative to the broader industry.

All of these things are helping to drive the improved NNA that we saw this quarter and making the Americas a meaningful contributor to full year 2026 NNA for the division overall.

Sergio Ermotti: On the capital proposal, I think that it is clear that the ongoing process now with the lower house is leading into a new round of coverage and speculations about potential other changes to the 90% proposal made in the Upper House. To be honest, I do not think that it is appropriate for us to go into discussing every single numbers that is thrown out. You make a reference to one of that number, and the one that we publicly, myself and our chairman, commented on was the 50/50 proposal.

While being still a very expensive outcome considering our current capital position and the true lessons learned of what happened with Credit Suisse, we felt that a 50/50 proposal was balancing the needs of financial stability and reinforcing the current regulatory requirements while allowing us to preserve a competitive position going forward. I will not comment any further on any numbers, as I mentioned. In respect of contingency plan, listen, we are not going to engage into debating internally and externally about what to do until things are finally approved and actually determined.

It is clear that there is no rush for us to act or to take actions that are not in the interest of shareholders and clients because it is going to take time to implement this new regulation. Of course, we are going to, and we will assess, and we are assessing what are the long-term consequences for our ability to compete out of Switzerland. Because it is very clear that for our clients, they do appreciate Swissness like we do. Like we believe we contribute to the Swiss system. A passport is not enough nowadays. People are expecting also quality of products, competitive pricing, and an ability to serve them globally as we do.

Therefore, I think that it's premature for us to really think about the long-term consequences of what will happen.

Antonio Reale: Thank you.

Operator: The next question comes from Anke Reingen from RBC. Please go ahead.

Anke Reingen: Yeah, thank you very much for taking my questions. The first is just on the costs. I just wondered if you can confirm, give us some indication about what to expect for Q4. I guess Q3 was being relatively strong. We should have a good cost control Q4. We have additional cost savings coming in, but also seasonality. So the -1%, is there anything you would highlight, we should be a bit more cautious on the Q4 trends? And then I just wondered in terms of client engagement. Obviously, the start of Q4 has been very different versus Q3.

And I was wondering if you can talk a bit more about the client engagement you're seeing in your Wealth Management operation aside from the seasonality. Thank you very much.

Todd Tuckner: Hi, Anke. Thanks for the question. First on costs. I think you summarized actually the Q4 outlook pretty well. On the one hand, we will continue to see the benefits of the integration, just given the integration costs we have been incurring, and therefore the saves that will become evident through our OpEx as we have been demonstrating each quarter. We have always said that we will run through the tape on 2026 and continue to work until the very end. That is still the plan. So we should still see some of those efficiencies and synergies coming through in Q4. As you said as well, Q4 does have some seasonality aspects in them.

The bank levy is one example, but also just often we see some uptick in costs sequentially. So nothing I would call out, but you would expect that those trends of continued cost efficiency offset perhaps by some uptick in seasonality will inform the performance in Q4 on costs. On clients, look, it is fair to say the Q4 market environment thus far for investors has been mixed. When you look at, say, rising correlations, things like rising correlations, deterioration in credit conditions, higher bond yields, and renewed inflation concerns to just take a few factors, they are leading to more defensive positioning among our clients. Geopolitical developments, including elections, are adding to this more measured sentiment.

So we still see opportunities to help clients diversify, manage risk, and put money to work selectively, including a more attractive fixed income yields. So we will stay close to clients and capitalize on the opportunities that present themselves in this environment at present.

Anke Reingen: Thank you.

Operator: The next question comes from the line of Chris Hallam from Goldman Sachs. Please go ahead.

Chris Hallam: Good morning, everybody, and thank you for taking my questions. First, a quick one just on the U.S. When should we expect the National Bank charter to begin to translate into a broader U.S. product offering and perhaps sort of meaningful deposit growth? I think I've just sort of lost track on timings on that topic. Then second, to come back to the domicile point, there is an interesting tension within the group because, on the one hand, businesses such as the IB are relatively capital intensive, where the Swiss domicile may be less strategically important. While on the other hand, you've got more capital-light businesses such as GWM, which arguably derive significant value from that Swiss brand.

How do you weigh those competing considerations and I guess also the strategic value of the interlinkages between those two distinct type of businesses when you're assessing whether Switzerland does remain the optimal domicile for the group, as you said earlier, from the perspective of shareholders, clients, and also other stakeholders? Thank you.

Todd Tuckner: Chris, on the banking charter, with the license in hand, we are now in implementation mode and do expect that we'll be rolling out the first incremental array of capabilities as part of what the banking license allows and supports in our U.S. bank during 2027. We'll start from the beginning of the year piloting things, and we expect to ramp up over the course of 2027. And we expect that we'll leverage really what we've been demonstrating, I think, over the last many quarters, which is improved NII from improved banking capabilities within the current legal construct that we operate within today.

We're really encouraged by having now the National Bank charter to support an expanded offering and what that could mean in enhancing NII and accreting pre-tax margins.

Sergio Ermotti: Well, thanks, Chris. I think that kind of thematic has been discussed, I guess, over the last 15 years in respect of that trade-off between having a pure Wealth Management business versus having a IB. Let me remind you that we are also using a lot of financial resources to serve our households and corporate clients, SMEs clients in Switzerland, which, by the way, also highly benefits from having an in-house investment bank that helps them in managing all the aspects when it goes into raising capital funding, doing FX transaction at a very competitive levels. As you know, we are one of the top FX trader.

We are a leading house in equities, in capital markets, and in that sense, we add value to that. In respect of Wealth Management, it is quite clear, and I guess you know well that the correlation between IPOs, disposal of stakes, hedging of stakes that are going through the engines of the Investment Bank are critical elements in helping us to gather assets, not only in terms of net new money and net new assets you see every quarter.

If you look at the amount of assets we have in custody that are not yet free to be traded are another example of how the Investment Bank not only delivers services and capabilities that differentiate ourselves from pure Wealth Management players. More than justifying this selective vertical look into each single business, as I mentioned. In the last 10, 15 years, we have been demonstrating that we can compete in the Investment Bank if we focus on what we are good at, and this is our way to go. I don't think it has anything to do with the passport or where we are based, providing that regulatory requirements stays intact.

I don't think it is an option for us. If you look at the current proposed regulation, what they in fact they are doing, they are not even penalizing business segments. They are penalizing global reach. If this is all about a way to look at shrinking ourselves into being only a Swiss bank. Well, I don't really see our flows of assets being only directed to Switzerland. Actually, we are capturing flows in the U.S. You saw it this quarter. We captured big flows in Asia for the last 10, 15 years.

So being a bank that has a DNA of Swissness, that is rooted in Switzerland, is a big advantage, but it is not the reason why our clients are banking with us. By the way, Swissness was also the case in 2023. Okay? Let's remind that. So we have been helping restoring that Swissness over the last few years with clear and concrete contributions.

Chris Hallam: Very clear. Thank you very much.

Operator: Our next question comes from the line of Andrew Coombs from Citi. Please go ahead.

Andrew Coombs: Morning. One follow-up and one fresh question. I appreciate that you really want to debate the plans on the new capital rules once it's confirmed, and it's perhaps slightly premature today. But given that you're going into the 2027 planning cycle already, when you're thinking about how you allocate capital and how you allocate investments across the business, how are you taking into account the new potential capital rules, given what it might mean for marginal returns, in some of those segments? The second question, just a more specific question on OpEx. A lot of the savings at the back end of the integration plan were always due to come through in P&C. We can see that now.

A big improvement in the OpEx base down CHF 50 million to CHF 950 million in Q3. Should we expect it to now level out around that level? Is that a new run rate, or is there room for further improvement in Q4 as those integration savings come through? Thank you.

Todd Tuckner: Andrew, hi. On OpEx, in terms of synergies realized in the Swiss business, would expect that we'll continue to see some more room for crystallization of synergies in the fourth quarter, as all the integration investments that we've made on the platform crystallize and come through. I would expect that there's still upside to see in Q4 on a true underlying basis, which will reflect in our exit rate as we move into 2027. That's always been the plan. It's good that you observe that benefit is hitting through now. I would expect that the dynamics that have informed that outcome in Q3 are still in play for Q4 before we fully sunset integration at the end of the year.

Sergio Ermotti: Yeah. Andrew, on the 2027, 2029 cycle, first of all, as you know, the ordinance will come in effect and start to affect our capital as of January 1st, 2029, and in respect of the new potential regulation that will affect the foreign subsidiaries will come in force over, I would suspect, probably earliest in the very late part of 2027 or in 2028, and will be implemented over the years. That is the reason why, as we mentioned before, we are not under any pressure to change anything on our current successful business model. We need to really assess exactly what it is before we take actions that may be then regret moves.

I think that you will expect and you will see us presenting at the beginning of the year our refreshed medium-term plans, which will embed the 2028, 2029 outlook, considering that broadly speaking, the current regulation, other than the ordinance, as I said, as of January 1st, 2029, will be the one that is applicable. We are not going to go into front-running any regulation, for sure. By the way, as Todd mentioned, we are now also able, at the end of this integration process, to free up the buffer on capital that we kept over the minimum requirements.

Was meant to be, number one, to help us to navigate the integration and any unexpected delays in implementation or/and a potential new regulation coming in. So we have been very sensitive to that topic. But from January 1st, 2027, we are going to go into business as usual.

Andrew Coombs: Thank you.

Operator: The next question comes from the line of Jeremy Sigee from BNP Paribas. Please go ahead.

Jeremy Sigee: Morning. Thanks very much. Two questions, please. Firstly, on the U.S. Wealth Management, you talked about the lag effect, and you see that normalizing. Advisor numbers are shrinking again a little bit, which I assume is part of that lag effect. When would you see advisor numbers normalizing, and what does normal look like? Would that be stable numbers, or would it be slight growth, slight shrinkage? That would be interesting to know. Second question, unrelated, is there any visibility on the litigation from Credit Suisse AT1 holders? Is there any visibility on when you get the decisions on that appeal? The government's appealing, but obviously with implications for the bank as well.

Todd Tuckner: Thanks, Jeremy. Let me just take the second one quickly. No change there as far as we know. Decision not before Q1 of 2027. On the first one, you asked about the headcount dynamics in the wealth U.S. business. Quarter on quarter in terms of reported headcount, down slightly under 1%. Again, as I mentioned, the lag effect's important because that's really reflecting decisions and moves that were decided several months ago. We are seeing, as I mentioned in my response to an earlier question, I believe to Antonio, that we are seeing announced leavers and recruited advisors normalizing in our book, in terms of historic trends. So we're seeing that already on an announced or effectively trade date basis.

We're already seeing that. What does normal look like? I think it's fair to say that in the environment, there is still a move to independent advisor shops, and I think that you're seeing that across the industry. So I think a degree of net attrition is probably the industry norm that you see, as opposed to it being net flat I'd say as a general premise over the long term. So for us, it would be kind of normal net attrition levels that we've seen historically in our book and that we believe are aligned to industry levels. That to us is what normal looks like.

Jeremy Sigee: It's really helpful. Thanks very much.

Operator: The next question comes from Giulia Miotto from Morgan Stanley. Please go ahead.

Giulia Miotto: Good morning. Thank you for taking my questions. I have two on Wealth Management. Asia, are you seeing any impact from the recent changes in Chinese tax guidance? In particular, could you disclose how big is Hong Kong, as a percentage of total AUM or P&L, and how big is the trust business for UBS? Excuse me. The second question on the Americas. PBT margins was already 16% this quarter, and I believe 16% is the target for UBS for next year, and then a higher term, or longer-term target is high teens. Yet the benefit from the banking license is yet to flow through.

Could we expect that actually a 20% PBT margin is probably something more achievable than you previously guided for? Thank you.

Todd Tuckner: Thanks, Giulia. On the second one, we're focused obviously on delivering on our current ambitions. As you mentioned, we're ahead of schedule. We have still an 18% ambition for 2028 that we described to you earlier this year. When we provide the update next quarter, we can consider how we look at the outlook. But we're pleased with the development of where we are. But we're focused on delivering against our strategic priorities in the Americas business. In terms of the impact on some of recent developments, regulatory developments in China, first on the offshore direct investment, we saw the sort of final consultation paper was issued last week. We've been through that.

We view the changes as offering a strategic upside in the wealth business, considering that we see there the prospect of a formal pathway for Chinese individuals to invest onshore wealth and offshore direct and private market opportunities. While these changes are obviously subject to implementation and ongoing consultation, and there are key questions relating to scope and application, it's too early to quantify, but we do see the ODI broadly as strategically promising for our business. On what I can comment in terms of the offshore trust taxation matter, as you were alluding to, last week was the close of the 90-day transition period for settling specified historical offshore trust tax liabilities without late payment charges for Chinese investors.

We expect the effect in our book to be immaterial and the Q4 impact on flows to be small.

Giulia Miotto: Clear. Thank you.

Operator: The next question comes from the line of Kian Abouhossein from JPMorgan. Please go ahead.

Kian Abouhossein: Yeah. Thanks for taking my question. The first one is on capital. I think you mentioned, looking ahead, the CET1 ratio could come in around 14% by 2027. What we are seeing is clearly a lot of capital build. Sorry, by year-end, 14%. I just wanted to understand the main delta here of the 70 basis point decrease. Is it mainly buybacks in 2027, or what should be the drivers in that respect? The second question I have is related to Asia. Clearly we have seen slowdowns in transaction volumes when we look at exchange data. We know the client base generally is a little bit more market-oriented or short-term market oriented, I should say.

How should we think about the impact of market conditions, in particular on Asia and in particular on transaction?

Todd Tuckner: Thanks, Kian. Just to reiterate my comments. We expect the capital ratio delivered with our Q4 results to be at or very close to 14%. How is that? That will be, as I mentioned, an accrual for capital returns at the end of the year that will inform where we are relative to how we perform in Q4.

We are not specifically guiding on the level of the accrual, but we are saying that in seeing the current environment and the outlook in 2027 and our plans and considering our intentions in 2027, at least in part, the portion of capital returns we commit to or intend to commit to in the fourth quarter will drive down the capital ratio to around 14% by the fourth quarter. I think you were asking about in the APAC business and what we are seeing. Certainly, first, if you are looking year-on-year as one aspect, because I commented a little bit on the quarter-on-quarter.

Year-on-year, for sure, last year's Q3 was benefiting from a strong rally in China and Hong Kong equities, clearly supported by enthusiasm around AI and improving investor confidence. In this Q3, sentiment was more selective. This, by the way, can explain your sequential question as well if you were asking about Q3, Q2. This Q3 sentiment was more selective, and market momentum less sustained as we saw sharper reversals and greater divergence across Asian markets. I think just uniformly where Q3 2025, Q2 2026 probably had more uniform enthusiasm. You saw the indices were broad-based and strong, became a bit patchier in Q3. Also the quarter itself was a bit of a tale of two cities.

I think you recognize there were periods in the third quarter where some of the sentiment became either risk off or at least much more measured. I think that is contributing to the performance both quarter-on-quarter and year-on-year. As we look forward into Q4, I commented, I think, in response to Anke's question about how we see the market. That all said, we are seeing that the structural improvement in the business is there. This is informing. The market obviously with the beta factor will inform some degree of transactional activity. But we think that the structural gains that we have made will mean that we will still, on a relative basis, outperform in our APAC business.

Kian Abouhossein: Thank you.

Operator: Next question comes from the line of Amit Goel from Mediobanca. Please go ahead.

Amit Goel: Hi. Thank you. So, two questions from me. The first, actually just coming back on, I appreciate I do not comment too much on contingency planning, but just trying to understand really if you had to move the group's domicile out of Switzerland, how to think about some of the costs. Just thinking in terms of tax, whether something like $3 billion-$5 billion of exit tax on hidden reserves is the right kind of order of magnitude and whether that is something you could mitigate.

And then also on clients, would it be fair to assume about CHF 600 billion- CHF 800 billion of Swiss booked invested assets belonging to clients not domiciled in Switzerland, and what kind of margin do those clients earn? Then the second question, just in terms of net new money, I saw obviously very strong net new assets. Although, fee-generating assets a little bit lower. Just curious of the other $42 billion, how sticky it is and how much of that you expect to convert into mandates or fee-generating assets over time. Thank you.

Todd Tuckner: Hey, Amit. So, let me take your second question first. So absolutely pointing out the delta between NNA and NNFGA this quarter. Let me tell you how I have been looking at this. So we clearly have seen IPO and other liquidity events that are supporting flows for sure across our book. I would say the scale of IPO activity globally this year, including major U.S. listings and strong issuance across Asia, is creating significant opportunities to deepen client relationships and capture these wealth flows over time. We are already benefiting from sizable inflows associated with these large liquidity events.

That is what is contributing to the roughly $40 billion, by which, as you point out, NNA exceeded NNFGA this quarter. As Sergio mentioned as well, we have about 10% of our AUM, or about $500 billion is in other client assets or non-contracted or custodied assets as well. So all of these assets represent substantial potential to grow recurring fees and advisory and transaction revenues as we help clients diversify and invest over time. So a lot of dry powder. So I would really look at that delta as more a function of the NNFGA itself is reflecting its good growth. We are reflecting the strong mandate penetration, and the improvement in the margin support, top line margin support.

But I would also look at the NNA gross and that delta as representing significant dry powder.

Sergio Ermotti: Well, I have nothing else to add to what I mentioned before. We are not really commenting on speculations or assumptions or opinions on any of this matter related to a contingency plan. And it is totally inappropriate and everybody can come up with their own opinions, but we will not comment that.

Amit Goel: Okay. Thank you.

Operator: Next question comes from Benjamin Goy from Deutsche Bank. Please go ahead.

Benjamin Goy: Yes. Hi, good morning. Two questions, please. First, on Investment Bank. Equities are up and another strong prime brokerage quarter, it seems like. But just wondering, with your capital resources being either flat or only modestly up year-on-year, how you balance incremental investments there on the capital side as compared to the opportunity. One is Q3 backward-looking, and the other is whether you have seen a change in trends in October in terms of deleveraging of clients. The second point is on the U.S. Wealth Management.

We haven't really spoken about the workplace channel in quite a while, so I was wondering, in light of recent IPOs and the potential pipeline, how important it is, how well-connected you are, and the conversion of that. Thank you very much.

Todd Tuckner: Hey, Benjamin. So look on the Investment Bank, you're right to point out that if you look at resources, RWA and LRD are year-on-year broadly flat, despite the business growth. That comes from disciplined resource management and portfolio optimization, focusing on transactions and intermediation. So less about extending balance sheet per se, or at least balance sheet that is consuming RWA, and being more focused on generating transaction revenues in the business. That is where our focus has been, and that's how we have been able to generate attractive revenues despite the lack of consumption of financial resource. To wit, you look our client balances in prime brokerage year-on-year up 33%, and revenues are up 32% year-over-year.

Again, we're doing that while we see the balances increasing, we're doing that with very thoughtful and disciplined financial resource growth. On the second question, look on workplace wealth, that continues to be a priority for us to build that up. It is a funnel that we will continue to develop. It's been, as we've said in the past, a strategic priority that we'll continue to make progress on. It's part of the build-out that the team is undertaking and one of our strategic priorities. We would expect in the future to update on the progress that we're making.

Benjamin Goy: Thank you.

Operator: The next question comes from Nicolas Payen from Kepler Cheuvreux. Please go ahead.

Nicolas Payen: Yes, good morning. Thanks for taking my question. I have two, please. The first one would be on the IB and the equities trading performance. I think you're up 21% year-on-year, versus your peer up 40%+. Just wanted to know what could explain the gap. Is it a geographic mix or product mix that explain the gap? That would be the first question. The second question would be on wealth NII. Just wanted to understand what explained the near flat third quarter NII after guidance from modest growth, and how much of the fourth quarter increase come from lending or deposit margin or the mix, please. Thank you.

Todd Tuckner: Hi, Nicolas. Look, on IB equities, not going to comment on the relative performance, but we're really pleased with the performance of our equities franchise, generated $2 billion of revenues in the quarter, up substantially year-on-year. We do that with, as I just mentioned in response to Benjamin's question, we do that with very disciplined resource deployment. You see in FRC, we were up year-on-year, and that was despite rates being down, also just given strong FX performance. Look, our Investment Bank is excelling in the areas where it's focused, and it's doing that with a very disciplined approach to balance sheet.

On wealth NII, as I mentioned in my comments, we do expect sequential growth mainly from higher U.S. dollar rates that is partially offset by mix, which is marginal, but we're factoring at least some mix effects given the move up in dollar rates. Although the move up this quarter in dollar rates, really, it wasn't the dollar that impacted on mix in Q3 relative to Q2, but actually more Swiss franc and euro. But we are pricing in some of that in our outlook. That is low single digits in the Q3. If you look beyond that, I'll come back next quarter with a view on full year 2027.

We expect the higher dollar rate environment coupled with net interest margin support from the rollover of our replication portfolios at higher yields to generate similar NII annual growth trends in 2027 as we are seeing in 2026. I will come back and firm that up as we continue to model and do the work, but that should give you a perspective on the outlook for wealth NII.

Nicolas Payen: Thank you.

Operator: The last question comes from the line of Stefan Stalmann from Autonomous Research. Please go ahead.

Stefan Stalmann: Morning, and thank you very much for taking my question. I actually have only one follow-up question, please, to something that you said earlier, Sergio. You said we can now free up capital buffers held for integration, and from 2027, we will go into business as usual. Are you basically just describing the fact that you are running the 14.7% CET1 down to the target of 14% again, or are you maybe hinting at a lower target than 14% in the next business plan? Thank you very much.

Sergio Ermotti: What we are clearly guiding is the fact that not only that we are going to be at or very close to the 14% at the end of the year. What we are guiding on is the reasons why we had an excess capital buffer during the last 2 years was due to, as I mentioned before, the uncertainty around the timing and the effect and the potential volatility on capital going through the integration and the uncertainty over the last two years of the ongoing regulatory debate. The first item is out at the end of the year, so there is no reason for us to keep excess capital for that reason.

We are not going to keep any of that. In respect of the future capital requirements, as I mentioned before, we have plenty of time to build up capital that if and when requirements are coming into effect, we have the earning capacity to do it, and we are not going to just carry unnecessary capital for the next few years. We are not hinting at anything that is going to be then addressed with our Q4 results in respect of the future targets.

Stefan Stalmann: Thank you very much.

Sergio Ermotti: Looks like there are no more questions. Operator, can you confirm? Silence means agreement. Therefore, I look forward to updating you on our medium-term plans and targets with our strategic update with our Q4 results in February. Thank you, and have a nice day.

Operator: Ladies and gentlemen, the webcast and Q&A session for analysts and investors is over. You may now disconnect your lines.

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