Good morning, and welcome to our third quarter 2019 results presentation. I would like to draw your attention to our slide regarding forward-looking statements at the end of this presentation. It refers to cautionary statements, including in our discussion of risk factors in our latest annual report. Some of these factors may affect our future results and financial condition. Now over to Sergio.

Thanks, Martin. Good morning, everyone, and thanks for joining. We had a solid third quarter. Even with the mixed market conditions adding to the usual seasonality, we delivered over $1 billion in net profit. As the investment environment evolves, we continue to position ourselves for future growth and clients continue to turn to UBS. In Global Wealth Management, we had a good quarter. Our broad client relationships have driven net inflows of $16 billion, and we now look after $2.5 trillion of their assets. This scale allow us to invest, drive innovation and provide choice to even better meet their changing needs. In Personal & Corporate, strong net new business volumes growth this year is helping us mitigate interest rate headwinds. Asset Management had a third consecutive quarter of year-on-year profit growth or 4 on an adjusted basis, and so strong net new money inflows this quarter. The Investment Bank faced market conditions that were not favorable to our geographic footprint, business mix and the strategic choices that we have made for the business as well as tough comparisons with very strong results a year ago and in the previous quarter. That said, we are not satisfied with the Investment Bank financial performance this quarter. In response to trends and developments in the industry and reflecting on our recent performance, we are implementing a number of actions to evolve our business model. These actions will better position our IB to serve our clients, leverage investments we have made and capture important growth opportunities in the areas where we are strongest and returns are the most attractive. These changes will also support our efficiency drive and help fund critical investments in both technology and talent. Our goals remain unchanged: one, to deliver best-in-class services to our institutional and corporate clients for…

Thank you, Sergio. Good morning, everyone. As usual, my comments will compare year-on-year quarters and reference adjusted results in U.S. dollars, unless otherwise stated. We adjusted for foreign currency translation losses on sales of $46 million and restructuring expenses of $69 million. Year-to-date, restructuring expenses were $139 million, and we still anticipate around $200 million for legacy programs for the full year 2019. In addition, we expect the IB reorganization, as Sergio just mentioned, to lead to around $100 million of restructuring expenses in the fourth quarter. Excluding litigation, we expect an uptick in adjusted cost of around $200 million sequentially in the fourth quarter, which is broadly in line with 2018, reflecting normal seasonality, including the UK bank levy as well as buildup of regulatory-related expenses. Excluding the bank levy, we expect the vast majority to be reflected in GWM. Moving to our businesses. Global Wealth Management delivered good results. PBT was down 2% or up 2% excluding litigation. We saw healthy volumes across key growth levers, net new money, mandate sales and net new loans. For the quarter, operating income increased by 1% on higher transaction-based income offsetting lower recurring fees and net interest income. I'll cover revenues in more detail in a moment. Cost increased by 2% driven by higher litigation expenses and strategic investments in the business, partly offset by our savings initiatives. As part of our cost management and in response to the environment this year, we have been very disciplined on the hiring front, resulting in a reduction in personnel expenses, excluding FA and variable compensation, while still funding strategic priorities. We're continuing to invest in strengthening our controls, including our AML programs in particular, which will persist into the fourth quarter. These costs will spread across all business divisions but primarily GWM and…

[Operator Instructions] The first question comes from the line of Benjamin Goy, Deutsche Bank.

Two questions, please. First, on your net interest income in GWM, it was better than guidance and looking at how rates moved, probably better than expected. So just wondering what helped you in Q3. And you gave the guidance for rate cuts. Should we expect any positive mitigation in Q4 as well after the September rate cut? And then secondly, the Investment Bank cost, so is it fair to assume the $90 million you target on cost savings is mainly personnel expenses and that the non-personnel expenses likely continue to go up due to investments?

Yes. Benjamin, thank you for your two questions. In terms of net interest income, if you look at the year-on-year, we saw 6 basis points overall erosion in our net interest margin, and that's as a consequence, of course, of the lower interest rates but as well as price competition that we're seeing in the market. Now we continue to see that price competition, particularly for loans in the U.S. and internationally. Nevertheless, you did see that our net interest income quarter-on-quarter was more stable. And really, there was a slight deterioration in product results, but our treasury-related results held up a little bit better. You shouldn't read into that any indication of the future trend. As I highlighted in my comments, we still expect the persistent negative and low interest rates, along with further expected reductions in the Fed, will pose net interest income headwinds. And I highlighted that a 25 basis point move implies around $60 million of full year reduction, absent any changes to our balances or our pricing on a full year basis. In terms of the IB cost, you're correct, the $90 million reduction really is 100% personnel cost. In fact, the gross reductions actually are greater than that, and we are planning to continue to invest in technology in our Investment Bank, particularly in our electronic platforms just given how critical digital and electronic is in our Investment Bank's performance and in that industry going forward. In addition to that, I did highlight that there are some regulatory, increased regulatory cost headwinds that we expect to see in that business in the fourth quarter, along, of course, with the typical UK bank levy.

Yes. Perfect. And then maybe a small follow-up. So given the investments, is it too early to see a leverage out of these investments sort of say to reduce platform cost over time?

Yes. I'm not sure of your question around reducing platform cost. I mean I think as we indicated, the realignment of the business is importantly to adjust our organization so we can better serve our clients. So there is certainly a revenue component of this, and we do believe it will allow us to better allocate both our capital as well as our cost resources into the market segments on the business, the product segments where we can best perform. But then in addition to that, there's an efficiency element that we highlighted with the $90 million net reductions.

Next question comes from the line of Stefan Stalmann,, Autonomous Research.

I have two, please. The first one regards the Investment Bank. We have had quite a bit of a spike in credit and counterparty risk-weighted assets during the quarter, about $6 billion. Would you say that was a, let's say, seasonal spike that will drop back and normalize? Or is that a more permanent elevated level of activity and then capital consumption? And the second question is more, I guess, a strategic question regarding GWM. You have obviously made your high profile higher to co-head the business, Mr. Khan. Could you talk a little bit about what objective he is going to follow? And what he is asked to do differently from what has been done before in GWM? That would be helpful.

Yes. Thank you for the two questions. In terms of the IB, first, just to clarify, quarter-on-quarter, RWA is up $3 billion and the year-on-year, up just $1 billion. And year-on-year, that's despite the fact that we've actually absorbed a fair bit of regulatory-related increases. Now you shouldn't read anything in terms of what we saw quarter-on-quarter. It's just a normal business activity during the quarter. And also, I would highlight that our LRD was actually flat quarter-on-quarter and $16 billion down year-on-year. So that's reflective of the fact that there was just less inventory at work just given the lower volumes and activity levels that we saw this quarter versus third quarter last year. I think that...

Kirt, I was actually referring to the credit and counterparty risk component only, which was up $6 billion.

Yes. That was just really reflective of, during the quarter, activity that we saw across our CCS franchise. And it should be indicative of forward opportunities that we have for future deals in the pipeline.

So Stefan, on your second question, well, first of all, is that Iqbal's priorities are to help the execution of our current plans and that's really our first priority. We need to keep momentum on the execution and we have well-defined set of initiatives that we need to just execute. The second is that I asked him to basically look in the first 60 days to make his own assessment of our franchise and together with Tom Naratil to come back to me early in December with ideas on how to refocus or explore different opportunities. So I'll give him a little bit of time to really go into the organization, get to know people and, of course, like I expect every person being appointed to any new role in the organization, to bring something different, a new approach, and I'm sure Iqbal will bring his expertise to that.

Next question comes from the line of Kian Abouhossein, JPMorgan.

The first one is just coming back to the issue of transaction-based income in Wealth Management. You clearly state that it's up in all regions on a year-on-year basis also, and you talked about double-digit growth, by the way, and you also clearly see a relative good performance quarter-on-quarter. I'm just trying to understand that when I look at, clearly, stock markets, in particular in Hong Kong and Europe, and look at the data relative to what you illustrated in your revenues, which is very good, just to understand what's driving that. And in that context, should we not look at exchange volume data to get a feeling of what's going on? And if there's any other measures that you would suggest, if you could maybe highlight that in that context. And then the second question is regarding more U.S. Wealth Management business. In terms of hiring process, where we are, how we should think about that as employee numbers are going down? And in that context, the competition in the U.S., which is clearly heating up with some of the peers becoming very aggressive in pricing as well as some of the banks entering, so to say.

Yes. Kian, thank you for the question. First, I guess to put the transaction revenue in the quarter into context, it is, on a comparative basis, off of quite a low 3Q '18. And we also, you might recall, had a low 4Q '18 where our transaction margin was only 11 basis points. So what you see in this year is a 1 basis point uptick. But also, I think it's reflective of the fact that we have been very focused on working with our clients to find appropriate investment opportunities given the low-yield environment and given the very, very challenging macroeconomic outlook. You referenced equity and brokerage and stock exchange volumes, that's really generally not a good proxy for us in terms of transaction revenue. When we have a good transaction revenue quarter, usually, it's much more concentrated in structured products, so volatility can help, although we didn't have a lot of volatility this quarter, as well as positioning in funds and mandates. There was quite a bit of activity in positioning in funds that we felt were appropriate for clients. I referenced a couple, the $2 billion inflows in the real estate fund and also our systemic dynamic fund that I mentioned with $0.5 billion inflows. In terms of Wealth Management hiring, as you've seen, overall, we've had a reduction in our FAs, and we're very focused. And Tom consistently talks about our focus on productivity, not number of FAs, and we still believe that there is substantial upside in terms of continued improvement in productivity. Nevertheless, we have been very focused in our hiring and very selective. We focus much more on ultra high net worth FAs, FAs with a higher concentration of ultra high net worth, consistent with our strategy to increase penetration of that segment in the U.S. And you saw that result. We had $3 billion of ultra high net worth inflows during the quarter, although that was offset by some outflows from some smaller clients. We have a decent pipeline going forward, and that's going to continue to be our focus. And yes, indeed, there is quite intense competition and including you see JPMorgan step up their game, and the regionals are competing quite a bit. But we still feel comfortable with our franchise and our strategy going forward.

Next question comes from the line of Jeremy Sigee from Exane.

A question on targets and a question on capital, please. So firstly, on targets, you said that you plan to give us an update with the full year results. And I just wondered what sort of shape of communication we should expect, whether you would, obviously the 2019 targets would have been gone at that point. So is this about updating 2021 or rolling over to 2022? And should we expect any sort of tweaks to business strategy? Or is it just a kind of numbers communication? That's my first question. And then secondly, just on capital, you're proceeding quite strongly with the buyback. You've obviously done another $300 million in 3Q like 2Q. So I wonder, do you expect to reach the $1 billion that you're targeting, well, technically up to $1 billion, do you think you'll reach the full $1 billion? And have you reached decisions on dividend growth policy in relation to that preference for buybacks?

So thank you. Let me take the questions on what to expect in January. I think in January, you will get an update, as we, as I mentioned in my remarks, on how we execute this current strategy and outlining where we stand in the '19, how we executed in '19. And based on that, we will also update on if we have new initiatives or if we believe that some of the initiatives that we have in the pipeline may need to be a slowdown or even not considered for the future considering market changes. And the second topic, we will also highlight our expectations for the profitability and the targets for 2020, but also rolling over what you saw in 2021 into '21 and '22, so I mean pretty much in line with what you saw a year ago. And in terms of our share buyback, I think that as I mentioned in my remarks, again, we are accruing for a cash dividend in line with our policy. And our intention is to continue to execute on what we mentioned in the past, so buy back up to $1 billion for the year.

And the dividend policy is the mid-single-digit growth, that's the current stated policy?

Exactly.

Next question comes from the line of Jernej Omahen, Goldman Sachs.

I actually have two questions. The first one is on Page 12 where you highlight that you've reduced the hurdle for negative interest rates on your euro deposits with your customers. And I was wondering what type of a financial impact do you expect from this move? And I guess it's correct to say that this should already materialize the next quarter. Separately, just as an aside, it says here that this applies to deposits held in UBS Switzerland. And I was wondering whether, what that means, that if you have euros in Singapore, you still get 0 or whether that's something different? And the second question I wanted to ask, so there's a $100 million restructuring charge that you've earmarked for the Investment Bank. I think the charge is low compared to the cost base in the Investment Bank. And I was wondering whether there is a particular area within the IB that you're targeting with this charge.

Yes. Just regarding the negative rates overall, I think, first, you might recall back in 2017, we first introduced charging on euro cash deposits, and that was really driven mostly to address the fact that we had a large euro deposit overhang versus our lending book. And at that point, we saw quite significant outflow. And actually, we saw net new money outflows. So now we lowered the charging floor from €1 million the €0.5 million, and the focus as well is also to deal with the fact that we have a large overhang. Now we already communicated that to our clients. And as part of that communication, we offered alternatives for them to shift their deposits into other products, other investments or other legal entities where we actually needed the funding, which is why the shift out of UBS Switzerland for us is accretive to the group overall. We've actually already seen the reaction. And in general, we think that we're going to see more shifts into products rather than clients opting to pay the pricing, and the same dynamic for Swiss francs where we introduced pricing for the first time on deposits above CHF 2 million. In terms of the restructuring charge, the restructuring really just aligns with the organizational changes that we made, where we talked about realigning the global bank around 5 segments and 3 product segments, including the introduction of private markets, and then internationally where we've converged our equity and our fixed income business around platform, around structuring and around financing. And the overall restructuring and the reductions are going to be broad-based across the group at fairly senior levels.

Can I just ask as a follow-up, what is the negative rate? So if I could, if somebody has €10 million on deposit in UBS Switzerland, what would you charge them?

Well, we haven't announced specifically what we will charge them. But generally, it's in line with the current negative rates that you see for euros and for Swiss francs.

Next question comes from the line of Jon Peace, Credit Suisse.

So my first question is about net new money in the Americas. It's been flat or negative for about 6 quarters now, and I just wondered what is going on there. And it's quite a drag on your group net new money goal. And when do you think that might sort of normalize upwards a little bit? And then my second question is on the litigation in France. Is there any change to your expectation that we probably won't get any developments here until the end of next year?

Jon, yes, in terms of net new money, I think first and most importantly, of course, we constantly remind all of you that the focus really should be on invested asset growth rather than net new money because as you know, net new money can include a lot of different components. It can be either high quality or low quality. And in general, we see more of our growth in invested assets driven by market moves and dividend retention than we do net new money. So with that, if you look at our invested asset performance in the U.S., it's completely in line with our U.S. competitors. I think there was a chart that we showed last quarter where over the last 3 years, our net new money growth has been very much in line with our U.S. competitors. So that would suggest the dynamic where it's relevant, net new money has been and performance has been pretty consistent across our peer group. Having said that, we did have net neutral net new money for the quarter. We had $3 billion of inflows from our ultra clients, which is our strategic target. And our intention is to, going forward, to begin to show some growth in net new money in the U.S. And the second question?

It's on regulation.

For which?

Expectation on regulation implementation.

Yes. So broadly, I think if you look at the continued regulatory and compliance investments that we're making, we're making those across the group. I highlighted the fact that we continue to spend a fair bit to up our game in AML, and that is just as the regulators continue to up that bar. And as a leading global wealth manager, it's appropriate for us to do that. In addition to that, if you look in other areas where we're spending money, we need to onboard the ECB as a consequence of the Brexit and the establishment of our SE entity in Frankfurt. We're also spending a fair bit of money to address LIBOR migration, benchmark migration, which is an industry challenge more broadly. So there's still a number of requirements that we have where we are investing to address regulatory as well as up our game on the compliance side.

And specifically with regard to the French tax case, we shouldn't expect any material updates on that until the end of next year? Or has your timetable evolved a little bit?

The next update is going to be on November 4. There is a, it's not sure, but most likely, we're going to find out the date of the appeal trial.

Next question comes from the line of Andrew Stimpson, Bank of America Merrill Lynch.

First question on the IB, please. The IB has made a return on, or ROA of 9.4% in the first 9 months of this year. And today, you've announced there are some cost cuts to try and fix that. But the $90 million of annual savings, it seems quite small given the headwinds that you've got there. I think on my numbers, at least, it looks like it might add 70 basis points or so to returns. So it still leaves you a pretty big gap. So I'm just wondering how, given that that's the level of restructuring you've announced, how that division will get back towards its target being above 15%? And is there any heavy lifting to come from the denominator there? So I think you mentioned very quickly there's something about on the balance sheet from, a smaller balance sheet maybe. I don't know if I misinterpreted that. Or whether the plan is just reliant upon improved revenues in the IB? And then secondly, Kirt, you spoke about discipline on costs and the adviser numbers in GWM. But the costs that we actually see in GWM haven't been dropping year-on-year. So even though the adviser numbers are down about 460 year-on-year, so what is the driver there? Are you, is it that you're needing to pay up to retain the other advisers that you've got as the competitions increase? I guess for all of us, when we look at our models, we tend to think that if adviser numbers are going up or down, then that would be the, one of the main drivers on costs. So just wondering if that relationship should reestablish itself in the future.

Yes. Andy, thank you for your two questions. Just in terms of the IB, and I think you heard my previous response, the changes that we're making are not just cost, but very importantly, they are realigning our overall organizational model. It's an evolution in our organizational model and really the kind of the first change that we made since Accelerate. It also recognizes just the general change in trend. So we do believe that with the resources that we will continue to have in the Investment Bank, we'll be able to better focus them on opportunities of growth, and that's both capital as well as our human capital. And with that, we would anticipate, in addition to some of the efficiency improvement, that, that should improve our ability to achieve our target return levels. In addition to that, importantly, we continue to accelerate the IB and how it supports GWM. Sergio referenced a couple of areas: the acceleration of GFO, which for us is a major growth area, along with the combining and the integration of our platforms, which is not part of this overall savings that we mention both in the U.S. and internationally. And that should help to contribute cost as well as revenue for both businesses. There's no intention to shrink the footprint at all. We're still targeting the 1/3 of the group's capital, so you did hear me incorrectly there. And we believe that that's still the right minimum capital level for the Investment Bank for it to be relevant. In terms of discipline on personnel cost, what I would point out for Wealth Management is that actually, if you look year-on-year, there are about 850 reduction overall in headcount. That includes middle office, of course, as well as some FAs. And along with that, actually, there's been quite a substantial reduction overall in our personnel expenses. In fact, personnel expenses are down year-on-year as we've taken those saves and we partially reinvested them in the hires that we're making in China, the hires we're making in the U.S. for the build-out of our GFO and our ultra high net worth program, but yet still delivering some net savings. Our overall costs are up because on top of that, you do see the litigation cost year-on-year and you also, in addition to that, see the increased investments that we're making in technology as well as compliance.

Okay. Great. And just to follow up on the IB, when you say to, you'd be better focused, the capital and human capital, we better focus, is that just you redirecting that capital into the higher-returning areas? Or is that more the velocity of the balance sheet?

I think it's some of both. I mean, as you know, one, the way that we've oriented our Investment Bank, it's capital-light and it's capital-efficient and very highly capital productive. And so we do think with the reorganization, a good example, we've moved our global bank, our CCS business into a focus around 5 industry segments globally. And so that will allow us to be much more efficient in how we deploy our capital globally across geographies. And we've moved away from really a geographic structure. In addition to that, converging our markets' platforms so that we can better leverage the technology investment we have, and execution platforms will also allow us to generate better return on that investment capital.

Next question comes from the line of Magdalena Stoklosa, Morgan Stanley.

I've got two questions. One is on the pricing in the U.S. and another one is on the operating leverage. So really, in the U.S., we're seeing very different kind of price moves in the market. We have seen discount brokers moving to 0 commissions. You are kind of suggesting slightly lower fees on select accounts in, on the Page 5, I assume to kind of drive the net new money and mandate sales as well. But I'm curious more kind of philosophically, when you see kind of, how do you see the overall pricing evolution, particularly as you kind of target very different layers and higher layers in the private bank? But also, how do you think about the value of the device in the U.S. market, in particular, going forward? And my second question is really about your operating leverage. And when you think about 2020 in particular, what are the levers to pull on the operational side that you see? Because, of course, we have, you've communicated the savings you're seeing from the IB restructuring, and you've also been talking about the regulatory and conduct cost inflation, but do you see any of that abating into next year?

Yes. Thank you, Magdalena. In terms of pricing overall, of course, we saw the move by the electronic brokers by Schwab to eliminate their brokerage fees. And just to put that into context, brokerage income is a very small percentage of our overall operating income. And in addition to that, we already, over a year ago, waived our commission fees on our Workplace Wealth solutions, which is our equity investment, our employee equity investment platform, which is a part of our business that most directly competes against Schwab. And if we think about our pricing more broadly, if we look at in particular, of course, our advisory pricing, which is the most important pricing component of our U.S. business, there are many other dimensions where we add value, including planning a trust advice, helping with philanthropy solutions, thinking about the next generations. And that holistic advice, I think, is recognized by our clients, first of all, as having a cost component, but also as having a much greater value component than just execution and transaction. We still feel pretty secure in those margins and our pricing integrity overall in the U.S. On the operating leverage side, I think what we've guided before is we are looking to maintain our total direct costs, excluding variable compensation flat going forward. And then maintaining that flat, we're generating substantial cost saves to fund the additional investments that we have in compliance that we highlighted, mitigating some of the regulatory issues that we need to address in addition to investing in the business. And we feel that, that flat trajectory is appropriate for us given what we want to accomplish in the franchise. And so therefore, the operating leverage will come from what we generate on the alpha side as well as any beta help we can get in this environment, which is a bit more fleeting, we would admit. So clearly, we're going to have to track and watch how the market evolves as we get into 2020.

Next question comes from the line of Andrew Lim, Societe Generale.

First of all, can I tackle the GWM net margin? Obviously the markets, to some extent, are working in your favor. S&P is near record highs, and the market is doing well. But your net margin is still declining 14 basis points now versus 16 for the third quarter last year. I know you don't have a target, but is there a lower level here where, which you would say to yourselves, this is intolerable, we can't face single-digit basis points on the net margin and we had to do something about them? And what, to your mind, are the key strategic initiatives that you'll undertake to try and defend that in the near term? Or are you just hoping on the market beta to try and rescue the situation? And then the second question really drills down a bit more on the NII side. So you've announced, of course, some changes on the deposit charges. If we look forward to what the forward rates are pricing in, to what extent do these changes on the deposit charges offset the net interest margin from depression from the rate decreases? I'm just trying to get more of an absolute sense of how this should play out in the coming quarters.

Yes. So Andrew, first of all, if you, so if you look at our net margin dynamic, as you point out, we were at 16 basis points last year during the third quarter. Second quarter, we actually were at 14 basis points. We did have a 1 basis point recovery in third quarter. Now what's driving that on a year-on-year basis? There a couple of dynamics. I referred to the fact that we saw a drop in recurring fee margin in the first quarter. Now that's really stabilized year-to-date. And the drop was driven by the fact that clients moved into lower-risk under contract products and also lower-priced under contract products. In addition to that, it's the segment mix into ultra high net worth. And then on top of that, it's also within the mandates, its overall risk levels. And we do expect going forward to see continued stability overall in our recurring margin. Our net interest income margin is also down 1 basis point year-on-year. It's partly offset by 1 basis point increase in transaction margins. Now overall, we still have good confidence that we're going to maintain stability and even show some improvement if we get some help with the market environment in terms of net margin. And what's going to drive that? Banking product penetration is critical. And we've not had a good year-to-date lending performance, but we're still very focused on growing our loans. Mandate penetration where we have seen some improvement, and that's a continued area where as we increase our penetration, we'll see an uptick in margins. And then on top of that, it's continuing to manage our overall discount levels. Now in terms of net interest income on your question, your forward question around pricing, I'm not exactly sure what you were getting at. But essentially, if you look at the industry, betas are somewhere around 50%. And so what that's going to suggest is rates come down, there's 50% of that, that we can pass on to clients and 50% that kind of hit us. And as we look at that $60 million I referenced, that takes into account our current product and pricing structure as well as our betas.

I guess I'm trying to ask more specifically, given the changes that you've announced on the charges for client deposits, are you still expecting your net interest income, or your net interest margin, rather, to decline on the GWM side given where forward rates are?

Yes. I mean, so if we look at charging, I mean, of course, the charging applies specifically to euro deposits and Swiss franc deposits. And if you look at that and put that into context within GWM, we actually implemented charging more because of the capital burden we have with excess euro cash. We don't have a large euro loan book. And so when we implemented that charging back in 2017, what it did is we saw outflows, so clients took the cash elsewhere. Now the charging that we now, the updated charging bringing down the floor to €500,000, first of all, you should think that the industry is catching up, so we're seeing other competitors that are introducing charging. So there's going to be probably fewer places that clients can take their cash. But again, overall, it's not just a play in order to increase net interest income. It still remains a capital play in managing our LRD where we have excess and we don't have a lending volume to be able to absorb that. And it's a similar picture with the Swiss franc side. Now our P&C business is a completely different dynamic.

Sorry, just one more follow-up question. Would you still expect deposit outflows because of this change in the charging structure? I think you referenced on net new money outflows the last time you did this back in 2017. Would we expect the same this time around, especially as you seem to be on the front foot in terms of charging for deposits?

We don't really see a lot of this happening. As Kirt just mentioned before, you have to wonder if somebody is willing to pay for getting net new money right now, maybe you have one-off situations, but structurally speaking, we see the industry facing the same kind of dilemma. And therefore, for the more wealthy clients, I think it's, we try to find tactical solution to avoid that. But I think it's clear that over time, as the pain grows, it's going to be inevitable that we have to do a trade-off between profitability and capital consumption and net new money, as we always say. What we will not do, we will not pass negative rates to the affluent and retail segments.

Next question comes from the line of Andrew Coombs from Citi.

One question on Investment Banking revenues, just one follow-up as well on the Swiss franc deposit charge-through. On the Investment Banking revenue mix by region, you cited that the impact was unfavorable for you in part due to your regional mix, and you cited the Dealogic fee pool for Asia and for Europe. But if I look at Slide 25, which gives the regional breakdown, the decline year-on-year in your Investment Banking revenues appear to be more due to your U.S. business rather than Asia and Europe. So if you could just elaborate on what was driving the weakness there in your U.S. Investment Banking revenues. And then my second question, coming back to this point about the Swiss franc deposit pass-through from November on customers with more than CHF 2 million, what proportion of your deposit base do you expect to be captured by that?

Yes. Andrew, if you look at our Investment Bank, first, to the comment that on a relative basis, so if you look at our overall concentration of revenue and activity compared to U.S. and European peers, we are much more weighted to Europe and Asia Pacific. Now having said that, of course, the U.S. fee pool is far larger than the Europe and the Asia Pacific fee pool. And in addition to that, if you look at the performance during the third quarter, you saw that Europe fee pool was down a fair bit. The Asia fee pool was down a little bit less, but still negative. Now year-to-date, we've actually held our share and increased our share in EMEA. So across those regions, we performed on a relative base as well. Where we have not performed well is in the U.S. In the U.S., we were down more than the fee pool, so the fee pool was up slightly 1%, if you look at Dealogic, and we were down considerably, substantially. And so we did underperform in the U.S. in the largest fee pool that had the best performance during the quarter itself, and that really explains our CCS performance overall. Now we're taking actions to address that. We've done some hiring year-to-date. And also some of the organizational changes that I mentioned is really looking to stabilize and improve our position in the U.S. market. On your second question in terms of relative balances, we haven't really indicated the distribution of our balance by account size. I just would mention that, as you would expect, we do have a relatively large concentration of Swiss franc deposits with clients with more than CHF 2 million in deposits.

Next question comes from the line of Anke Reingen, Royal Bank of Canada.

The first one is just coming back on the Investment Bank and your January update of the targets. So with Q3 results, the update you announced, the $90 million cost savings, would that already capture the potential update on the Investment Bank? Or assuming everything else stays or the environment stays the same, there is no update with respect to structural changes or more cost savings on the Investment Bank that we could expect in January? And secondly, you talked about a lot about the potential for cooperation revenues and cross-selling. I was at the impression that UBS was more ahead than its peers. And I just wonder, is there any indication you can give us and how much it contributes now or where you think you are on the potential to benefit from the cooperation within the group?

Yes. In terms of your first question, I think as we've said several times, the changes that we've made in our Investment Bank, which are meant to address both revenue opportunities as well as some efficiency, are what we've done to date. And we think it does position us to be a much, in a much better shape to be able to achieve our targets going forward. And there's nothing else you should anticipate that we're going to announce around the Investment Bank. On the collaboration side, indeed, collaboration is a really core part, critical and core part of our overall group model. And we do have substantial collaboration that takes place across all of our business divisions. Sergio mentioned the upshift in the referrals that take place from P&C into Global Wealth Management. We talked about the GFO, which is a joint venture between GWM and also the IB where we see a significant uptick when we transfer our client into that segment construct. We talked about what we're doing with Asset Management and GWM. So for us, it's not really recognizing the fact that we don't collaborate now. It's actually recognizing that we think we have further upside that even though we already, we believe, we're one of the better groups in terms of level of collaboration, we still think that there's substantial incremental opportunity for us to focus on accelerating and increasing the level of collaboration across our businesses.

Next question comes from the line of Amit Goel from Barclays.

So two questions, one more a follow-up to a previous question. Just on the GWM net interest income, I'm just curious, you mentioned that quarter-on-quarter, there've been slightly lower product revenues and slightly higher contribution from treasury. Just curious if you can quantify the change in treasury contribution quarter-on-quarter. And so that's the first question. And the second question just relates to the cost guidance that you gave at the half year. I'm curious if you still expect to see H2 cost greater than H1 on an underlying basis.

Yes. On your first question, as I highlighted, we did have slightly better quarter-on-quarter group treasury revenue. There are really no specifics that I can provide. There typically is a little bit of volatility in our group treasury revenue for the business divisions, and you kind of saw that quarter-on-quarter this time in our favor. In terms of cost guidance, yes, the cost guidance we provided previously stands. We do expect overall an uptick in cost in the second half versus the first half.

Next question comes from the line of Adam Terelak, Mediobanca.

Sorry to flog a dead horse, but I want to come back to GWM NII. You've given the guidance on the short-end move of the curve to 25 basis points to $60 million. But I'm more intrigued about the kind of the mid, long end point of the curve, what the shift down in the euro swaps means for your deposit revenues on a multi-quarter basis and how much headwind could come through as those hedges roll off into lower rates? And then secondly is on the positive side. If you could just quantify the benefit that's going to come through from the up-tiering threshold at the SNB and where we should expect that in net interest income, GWM versus P&C?

Yes. In terms of the curve, so the curve dynamics for us, they're much more impactful for U.S. dollars and Swiss francs where we structurally have a much higher volume of hedges just given the overall deposit composition that we have. There's not an awful lot of longer-term exposure we have to euros just because that is, in order, it's the third concentration of deposits overall. But still, nevertheless, if you do see a downshift in the longer end of the curve, if you see inverted curves, it does have an impact on our replicating portfolio as we roll over our hedges, and it will have downward pressure overall in our net interest income. In terms of the, excuse me? No, we certainly haven't offered any guidance specifically on what happens to euro curve, so there's nothing. The only guidance is what I mentioned around the shorter-term rates, the 25 basis points. Otherwise, right now, there's really no additional guidance that we want to provide on sensitivity to rates, except other than what you see in our quarterly report. And as always, you see sensitivity to various scenarios now, including a 100 basis point parallel shift, and that's still in our report. The second question around up-tiering, I'm sorry, what's...

The benefit of up-tiering of the SNB.

Oh, yes, the benefit of the up-tiering the SNB, that will be allocated to the business divisions that contribute in terms of their deposit mix to where that threshold is allocated. So it will be allocated across GWM and P&C going forward. And what we want to do is actually use that as a way to incent the businesses to get the right structure, the right type of deposits going forward.

The next question comes from the line of Nicholas Watts from Redburn.

I had a question on the U.S. Wealth Management business. The operating margin target, or the pretax margin target for that business is 25%, that's about 5% below where your 2 large peers are operating at the moment. Currently, that is sitting at about 15%, a level that's been floating at for sort of the last 6 quarters. And I was just wondering whether that target of 25% is something you're thinking about recalibrating or whether you think it is still achievable, particularly given where your 2 largest and closest peers are sitting.

Yes. Nicholas, thanks for the question. I think when we announced that last October, first of all, it was a very different beta environment, including, of course, the U.S. dollar rates and where they sit. Now in addition to that, you heard the actions that we associated with the improvements still stick and the ones I mentioned before, it's increasing mandate penetration, it's increasing our lending and our banking products penetration overall, it's continuing to improve the productivity of our FAs. And that's still the path to improving our overall efficiency. As Sergio highlighted, any changes in targets will be announced as part of our fourth quarter earnings.

Ladies and gentlemen, the webcast and Q&A session for analysts and investors is over. You may disconnect your lines. We will shortly start the media Q&A session.