00:00Ralph Hamers of UBS welcome to Bloomberg you describe this quarter as an extra ordinary quarter. I look at the transactions they're dying 20 percent in wealth management. Are we in a full fear mode. No not at all. To be honest and clearly if you see if you look at the last quarter two or three things we did and focused on the first one is continuing to execute on our strategy that was really important in order to make sure that the plans that we had really got going. Second stay very close to our clients because they needed our advice more than ever. A third risk manage both our own as well as the clients money that was important. With that we have been able to continue to grow our business with up to 8 billion of commitments into private markets from our clients as well as 7 a half billion of inflows on the attorney product for example. So you actually see flows continue to come through and that new fee generating assets at 19 billion net new money is 14 billion. So you saw a quarter that in which the flows were very very strong. Just give us a sense the job of his where did the money flow in. But where did the transaction slow down. Yeah. So if you look at that perspective you see that our geographic Pratt model. So our well the first five model helps us making sure that where we saw some muted demand in Asia which was not a surprise because it was muted for the last couple of quarters already. Right. So Asian investors are more in a wait and see pattern. So you see transaction money going transaction income down from a year ago. However net new fee generating assets still positive. Also in Asia. So more money coming into mandates there. And then you see that in EMEA and Switzerland. You see a real pickup of demand in terms of investment and also and also the U.S.. So indeed. You know one region maybe still mute it from a transaction income perspective. However money flowing in even in that region the biggest threats. Yeah. You say it's an extraordinary quarter and you name a lot of reasons. In your view what is the biggest threat to the rest of the year. Well if you look at just again just to come back to this quarter because the current circumstances have both challenges and opportunities and that's what you saw this quarter as well. And I really want to make that point since the challenges are okay. What is going to change tomorrow. The opportunity is how are we going to help our clients with liquidity with execution. That's how we delivered our best quarter ever in jello and global markets for example. That's the opportunity. The threat is okay. Is transaction revenues going down on the wealth management side. But we see more and more money still coming through. So our brand is out there as a beacon of stability. Our capital strength shows that clients have trust in us. So you see opportunities and threats. And with things being so unpredictable you can only rely on what you're really strong that which is your own advice and your own stability. And that's what we bring to our clients. When I look at China there is a sense of panic in the currency markets. Growth levels are being stripped back aggressively D.C. and in material deleveraging or risk in your business in China and Asia. Well we have seen deleveraging in the last three quarters in in Asia Pacific specifically. So yes we saw that. And that is normal because in the back of a lower market you also see deleveraging because generally the leverage that we provide is basically financing the position in the stock market. So it's the stock market goes down the leverage goes down as well. So it is always a Matanzas but in this relationship there. And so yes we do see that on the other side. We also see that investors also in Asia are looking at you know recycling diarist. They are looking at managing their liquidity. So resources opportunities there would have very strong investment banking quarter also in Asia. Now obviously Russia is a key focus for every bank you've read. You've taken a hit of 100 million dollars and you're reducing your exposure. So we get the message. But are you expecting that hundred million dollars is the worst case scenario for Russia. And are you ready to exit completely. Well there's a couple of things around Russia. First we saw this going in the wrong direction pretty early on. So we started to do risk in January. Ready. So our already small exposure we have been able to further decrease to 400 million in terms of direct Russia country exposure. Also in terms of the business that we do we have not done any new business with Russian domiciled clients. And we don't do that. And so basically the activities that we have are activities to manage our own risk profile manage our our clients risk as well. So no new business being done. Since the start of the war the outgoing chairman acts of Abbott says there is no future for international banks in Russia. Do you agree. At this moment is difficult to see. The other major market story is rates. Interest rates. We expect two point seventy five percent by the end of the year. What's that going to mean as a boost to the wealth management business. So you will see two effects. So if you if you look at the rates environment an increase in rates it will absolutely help our net interest income. We expect a tailwind on the revenue side of more than a billion and materializing in the second half of this year in the wealth management business. We are ready for a rate shot growth. I'm looking at the forward rates two point seventy five by the end of year three and a quarter in one year's time. Are we ready for that kind of a rate shock. ISE. Are we ready for it again. You know things are moving so quickly and and not very consistently at this moment in time. For as it is stay close to your clients. Make sure that you advise them well make sure that you're not to leverage so that you can cope with with this and the affordability of the of the leverage that you have. And then I think you're ready. And that's what we're advising our clients on the landing. I'm looking at the landing numbers that weren't exactly blow out in this quarter. You got a rising rates environment landing which is under pressure. What's that going to mean in terms of the lending criteria. You're going to loosen up a little bit to boost lending. No we we our risk managers really prudent. We don't seek looser standards in order to boost our lending. That's not the kind of business we do. Our core business is business either Hang Seng business where we provide mortgages at conservative LTV ratios or we do Lombard lending. By the way the lending picture is the overall lending picture. You're right is a bit flattish in the wealth management business. But you on the line we continue to see quite some healthy lending numbers in the US. We saw deleveraging in Asia-Pacific. So as so the overall number may not look as a big number but the line you see real development of lending still in the US and here in Switzerland as well the investment bank had one of its best quarters. Now if we look back a year ago our key guess was in those numbers. What is it that's driven the IDB. Is it flow. Is it on the facts side. What is it that delivered the alpha in the IP. Well clearly you know what kind of house we are. So we don't buy business. We don't use our our balance sheet in order to get this business. We don't trader our own position. So everything comes off client business. So clients are seeking us to execute their equity transactions their foreign exchange transactions. So it's flow coming through. It is liquidity being provided to our clients making sure they can do that. And that's on the market side and the market that was a really good core. As you know a record quarter. But even on the investment banking side on the advisory side so many advisory we had the second best quarter ever. It's just that the equity capital markets sight dried up because of the uncertainty in the markets. You said is a pent up pipeline now. Yes for sure. Actually we have a quite a good book with more senior roles and ever also for you. From a UBS perspective however the timing of these these these transactions coming to market nobody can really predict at this moment what is the biggest. Second round effect of this war in Ukraine Wolf the biggest second round effect will continue to be a pressure on commodity prices and the uncertainty about gas and oil delivery in the world. And with that the prices of oil and gas in the world and with that impacting industries that are heavily dependent on either gas or oil and the prices of it. So the second order effect is the biggest there which will cause further inflation pressure which we may cause further need for central banks to curb that inflation in order to manage either stagflation or possible even a recession. Our scenario. Are you worried about a re-emergence of really strong oil prices and have you adjusted any of your risk of that. No. I think that what you currently see in the market that clearly there is this pressure on oil and gas in terms of what you can deliver and how quickly you can deliver. We're going into the summer season. I think that will also give time to find alternative routes and alternative energy. So that will take some pressure off of off the price of those prices. Column CAC joins you as chairman and just officially and just a couple of weeks. So is this a doubling DAX expected doubling dine on USA strategy with column coming in from Morgan Stanley and yourself. No it's very clear. Commerce being with us now for two weeks. It works really well. And he's very supportive our strategy. So very happy to have him on board. Are you ready to do more deals in America. Well I think a very close look. You know it is it's a very important geography for us. It is strategic. We have good organic growth plants there. The business has done really well again and this first quarter. And so where we can we will certainly keep our eyes open. Well farmers thank you for joining us.
