UBS Group AG (UBS) Q1 2019 Earnings Call Transcript

UBS Group AG (UBS -0.70%)
Q1 2019 Earnings Call
April 25, 2019, 3:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, good morning and welcome to the UBS first quarter results 2019 presentation. After today's recorded presentation, there will be two separate Q&A sessions. Questions from analysts and investors will be taken first followed by questions from media. You can register for questions at any time by pressing *1 on your telephone. Should you need operator assistance, please press * and 0. The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Martin Osinga from UBS investor relations. Please go ahead.

Martin Osinga -- Head of Investor Relations 

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

Now, over to Sergio.

Sergio Ermotti -- Group Chief Executive Officer

Thank you, Martin and good morning, everyone. Even before the first quarter started, we knew the comparatives would be challenging given the drop in recurring fee asset base in Q4 and the exceptionally strong start we had last year, both on an absolute basis and relative to competitors.

In addition, business conditions were particularly tough for a first quarter. Nevertheless, we achieved net profit of $1.1 billion and our main return metric, reported return on CET1 capital reached 13.3%. Our capital position remains very strong with a CET1 capital ratio of 13% and a tier 1 leverage ratio of 5.4%, despite further regulatory headwinds and the effects of the French matter. A lot has been said and written about the French case. At this point, there is nothing new to add other than that we are preparing for the next stage.

In the quarter, we made good progress in a number of areas. Global wealth management's net new money growth is back within our 2% to 4% target range, supporting a rebound in our invested assets. In APAC, invested assets passed the $400 billion mark for the first time, reinforcing our leading position.

Our Swiss business had a strong start for the year, with PBT up 8% and new business volume growth the highest in years. Asset management's invested assets were close to last year's levels and PBT group. Investment bank delivered a 7% return on attributable equity in one of the most challenging environments in years and FRC revenues were up 9%. I will cover our progress on costs in a moment.

As I said, we faced significant and broad-based external headwinds in this quarter. Clearly, this wasn't the beta environment we planned for. Equity markets recovered from the four-quarter sell-off. However, the other beta measures on this slide are below both prior year levels and market expectations. Investor sentiment was still affected by the four-quarter market turmoil. The wait and see attitude was reinforced by geopolitical risks and a worsening economic outlook.

The IMF cut its 2019 forecast for the third time in six months and the US dollar yield curve suggests more investors see a risk of recession in the future. In our latest sentiment study, which we will publish on May 7th, private investors declare that cash made up to 32% of their total portfolios. Against this backdrop, it is no surprise that clients across global wealth management and the investment bank traded less. Additionally, lower volatility impacted appetite for structure products while declining fees both in Europe and Asia left a mark on our CCS businesses.

March and April brought some green shots with sentiment and activity level partially buoyed by rising equity markets. It is still early in the quarter, but we should see benefits from higher invested assets, improved sentiment, and deal activity.

Reported costs were over $600 million lower if you exclude last year's pensions relative to gain largely offsetting the decline in revenues. A good part of the cost reduction was driven by natural hedges built into our model. We made consistent progress on our strategic cost-related measure, further brought down restructuring expenses, and benefited from a stronger dollar.

We are on track with the tactical cost measures we put in place to mitigate market headwinds. We have slowed hiring and some IT projects, but we will not hold our investments into growth-oriented initiatives. These actions support profitability without mortgaging UBS's future.

Overall, we expect our tactical cost actions to generate at least $300 million in cost saves incremental to our strategic actions with most benefit coming through in the second half of the year. On the capital front, we are exploring ways to accelerate LRD optimization. Thanks to our technology investments, we identified new opportunities to optimize liquidity management. For example, better balance between assets and liabilities at the legal entity level would also help us free up some trapped LRD. These initiatives will reduce LRD consumption by around $20 billion, with benefits also expected to materialize in the second half of the year.

We are also executing on the shorter and longer-term alpha plans we presented last October. Global wealth management continues to invest in its US ultra-high-net worth segment and is building out its global family office capabilities as we look to increase share of wallet and drive growth. Overall, we saw over $14 billion in net new money flowing into our global ultra-high-net worth business in the first quarter alone and increased mandate penetration across GWM to nearly 34%.

We continued to invest in our mainland China capabilities and in March, we secured a retail license for our Shanghai branch. In DNC, our digital initiative for Swiss SMEs is gaining traction and we saw around 600 million net new loans in this segment in the quarter. Also, we just opened a second digital factory in Switzerland, moving nearly 500 employees developing E and mobile-banking solutions to agile working environments.

We are making good progress in our growth areas in asset management, including strengthening of our position in sustainable investing and wholesale. The investment bank moved forward with the development of its electronic trading platform, improving its market share in electronic equities and FX trading.

At the investor update, we also highlighted the importance of collaboration and working in partnership for the benefit of our clients. We have a pipeline of such projects. For example, IB and GWM will partner to operate our US capital markets business in a more unified way. Bringing these teams closer together will enhance our offering and better serve clients in ultra-high-net worth and middle market institution space by leveraging IB's infrastructure.

Overall, I think we are in a good place with the strategic initiatives, but there is a lot of work ahead of us and external factors have affected the timing of some of our plans. For example, client sentiment has not supported loan growth in GWN. We remain focused on executing these plans and delivering the expected results.

As I said back in March, nothing changed with respect to our capital returns policy. The only open question was related to the size and pace of our future share buybacks. For 2019, considering our share price, we now expect mid-single-digit growth in our cash dividend, providing a bit more capacity for buybacks. We maintain our ambition to repurchase up to $1 billion worth of shares this year, but achieving the full amount will depend on a broad-based improvement in beta factors.

We plan to restart the repurchases in the course of the second quarter. We remain very confident that the secular trends underpinning our growth strategy are strong and we are uniquely positioned to capitalize on them. We are on track with both our strategy initiatives and our short-term saving measures and continue to deliver the best to our clients.

Over the last years, we stayed consistent with our strategy and sustainably delivered strong profits. This allowed us to meet capital requirements, address legacy matters, and since 2012, return around $16 billion to shareholders without diluting them or tapping them for capital. Our goal of delivering high and attractive returns on capital and off capital remain firmly in place.

With this, I'd like to hand over to Kurt.

Kurt Gardner -- Group Chief Financial Officer

Thank you, Sergio. Good morning, everyone. As usual, my comments will compare year on year quarters to reference adjusted results in US dollars, unless otherwise stated.

As you will note, our adjusted and reported results have largely converged with lower restructuring costs. The first quarter, we adjusted for restructuring expenses of $31 million, down over $100 million for the full year 2019, as we have guided previously, we expect to incur around $200 million of restructuring expenses related to our legacy cost programs.

Our effective group tax rate was 26% for the quarter and the cash tax relevant portion was 11%, resulting in a sizable direct benefit to CET1 capital. We expect our full year effective tax rate to be around 25%, absent the effect of any potential DTA revaluations.

We adopted IFRS 16, effective January 1st, 2019, resulting in a $3.5 billion increase in both RWA and LRD as well as an estimated $60 million full-year decrease in profits, $12 million of which were realized in the first quarter.

Moving on to our businesses, this was not a typical first quarter for global wealth management. The fourth quarter sell-off that led to lower recurring fees combined with lower client activity reflecting geopolitical concerns drove operating income down 5% versus a strong 1Q '18. This was partially offset by 5% lower costs.

Recurring fee and transaction-based income were both down around $200 million, while net interest income decreased slightly. I'll cover revenues in more detail in a moment. Costs decreased mostly on lower variable compensations. The saves from actions taken last year, which we highlighted at our investor update are being deployed to fund strategic investments. These include hiring in APAC over the past year, building out our ultra-high-net worth business in the Americas, and investing in our strategic platform in the US, to name a few.

We're on track to achieve the cumulative $600 million gross costs saved through 2012. Loan balances were slightly down sequentially as the dollar strengthened. Net new lending remained muted in the first quarter of 2019, not surprising given client sentiment.

Moving to revenues -- net interest income was down about $10 million versus 1Q '18, mainly due to currency effects as well as net deleveraging from clients in Asia in the second half of 2018. We had a benefit from the change in our functional currency to dollars, which was partially offset by higher funding costs. Transaction-based income was down 20% versus a strong 1Q '18, although it increased by 22% from the historic lows of the fourth quarter.

We did see an improvement in the last two weeks in the first quarter, with March transaction revenue flat on the prior year and the first few weeks of April have come in better than last year. Recurring fees were down 8% year on year and 7% sequentially, in line with the decrease in invested assets that we saw during the fourth quarter and underscoring the time lag effect that we flagged back in January, particularly for the Americas.

Recurring net fee income should be better in the second quarter as invested assets increase 8% sequentially, although there is some headwind from shifts toward lower-margin mandates. We reached almost 34% mandate penetration on net mandate sales that were positive across all regions. We remain focused on migrating our clients into advisory and discretionary mandate solutions in order to deliver on our ambition of more than 40% mandate penetration.

Moving to the regional view, in the Americas, recurring fees in transaction-based income were down, with some offset from higher NII as well as lower compensation. Higher invested assets and strong mandate sales during 1Q '19 should provide good momentum into 2Q '19. Invested assets were up 3% over the year and 8% sequentially, in line with US peers.

APAC delivered record net new money of $16 billion and together with a recovery in asset prices, invested assets rose 13% from year end to over $400 billion for the first time. Client sentiment was particularly negative during the first two months, reflecting trade and broader China economic concerns. This sentiment drove transaction revenue down by a third from a strong 1Q last year.

As I previously mentioned, clients turned more positive in March, supporting a rebound in activity levels. Despite the challenging environment, we have maintained our investment momentum in the region, including a net addition of about 60 advisors over the last 12 months. Brexit and growth concerns weigh on sentiment in Europe. Despite this, we saw $3 billion in net new money and over $4 billion in mandate sales. Invested assets grew by 3% in the quarter needed by currency effects.

Switzerland saw strong inflows at a 6% growth rate and is generally our highest PBT margin region. In terms of net new money overall, we saw $22 billion globally, including some very large inflows. Looking ahead to the second quarter, we're anticipating the typical seasonal outflows for the tax payments in the US, which were nearly $5 billion in the second quarter of 2018.

Personal and corporate had a strong quarter, with PBT up 8% from the previous year to $389 million Swiss francs. Operating income was up 3% with increases in all revenue lines as well as credit loss recoveries. Net interest income -- we further improved our product result, offsetting headwinds from higher funding costs and negative interest rates, recurring fee and transaction income were both up slightly. We booked $2 million in net credit recoveries in 1Q versus expenses of $13 million a year ago.

Costs were broadly flat as higher investments in digitization were offset by reduction in other areas. Cost income of 59% was in line with our target for this year. Business momentum was strong with net new business volume growth in 8%, the best in over a decade and supported by strong net new personal client intake. Asset management had a solid quarter with PBT up 2% to $109 million. A 6% decrease in expenses, which was mostly driven by cost actions we took in the second quarter of last year more than offset the 4% reduction in income.

Net management fees decreased by 7%, mainly reflecting lower average invested assets, but also continued pressure and margins. Performance fees nearly doubled to $27 million, driven by equities. Net new money was slightly positive in the quarter, although negative when excluding money market flows. Invested assets were up 5% or $43 billion sequentially, which should help 2Q '19 management fees.

In the IB, PBT was down year on year, but up from the prior quarter. 1Q '19 was particularly challenging for us, mainly because of three factors. One, we had a very strong performance in 1Q '18, particularly in CCS, two, the impact of lower client activity in response to extremely low volatility, and three, our concentration in Europe and APAC, where conditions were more challenging than in the US.

Despite this challenging environment, our ICS businesses returned their cost of equity. In the month of March, the IB overall made a return on attributed equity of 13%. Our CCS revenues were down nearly 50% from an exceptionally strong 1Q '18, where CCS was up 22% from 1Q '17. This reduction reflects lower fee pools, particularly in cash, ECM, and LCM, a smaller footprint in the US, as well as lower revenues from private transactions.

Our equities revenues were down 22%, in line with US peers. We saw decreases in all products with lower client activity in response to extremely low realized volatility, which affected derivatives in particular. In addition, deleveraging by hedge fund clients at the end of last year created a headwind for our prime brokerage business. We were, however, pleased with our performance in electronic cash trading, where we believe we've gained market share across all regions.

FRC had a strong quarter with revenues up 9%. Credit improved if conditions were more supportive for [inaudible] business. Rates performed well, benefiting from higher client activity in areas of strength. FX decreased on low volume and the weakest FX volatility we have seen in the last four years. Costs reduced by 14% overall, mostly on lower personnel expenses. RWAs came down slightly during the quarter, mainly as market risk decreased with lower volatility, reversing the 4Q '18 spike. This was similar to the trends that played out in 1Q '18 and 2Q '18.

In corporate center, a number of factors contributed to the results. For example, counting asymmetries and hedge count ineffectiveness, both of which may revert to zero over time jointly contributed $140 million gained this quarter compared with negative $50 million in 1Q '18. We also had nearly $40 million in revaluation in NCL in 1Q '19.

Absent any effects from accounting asymmetries, hedge count ineffectiveness and litigation, we expect the corporate center laws to average around $250 million per quarter. Total corporate center costs excluding tech spend, litigation, and currency effects were down 4% year on year, as we saw benefits from actions to improve our structural efficiency, more than offsetting continued headwinds from regulatory spend.

Corporate center headcount, including external staff, is down around 1,500. This is driven by our insourcing program, which apart from improving effectiveness and reducing risk contributed to year on year cost savings.

Now, on RWA movements -- for the last three years, we've seen increases of around $50 billion from regulatory model and methodology changes, which were not driven by underlying business risks. The $50 billion is equivalent to over 3 percentage points of CET1. Put simply, 13% today would have been equivalent to about 16% back in 2015. So, at our current CET1 ratio, we're much better capitalized now than we ever have been.

Turning to the first quarter, there are two points I'd like to call out. We had a $2.8 billion increase in risk RWA related to the French cross-border matter. We also saw a $7 billion reduction in market risk as mentioned in my comments on the IB earlier. On CET1, growing concern and gone concern capital ratios are all above the 2020 requirements.

Turning now to our capital guidance, we've indicated that we will operate around 13% and 3.7% for CET1 capital and leverage ratio. We want to provide some clarity. For CET1 capital, you can expect us to operate within 30 basis points above or below the 13%. So, between 12.7% and 13% -- this gives us flexibility to meet our capital return objectives and deploy capital to support business growth. For leverage, we expect to generally remain above 3.7% and continue to see this as our bonding constraint for now.

To sum up -- clearly, this wasn't the easiest start to the year, but overall, our performance was resilient with over $1 billion in net profit. We are fully focused on executing our strategy and delivering our initiatives. With that, we'll take questions.

Questions and Answers:

Operator

We will now begin the Q&A session for analysts and investors. Anyone who has a question may press *1 at this time. The first question from the phone comes from Andrew Coombs with Citi. Please go ahead.

Andrew Coombs -- Citigroup -- Analyst

Good morning. If I could just ask for one update on some guidance you provided at the investor day and that's the NII based on implied forwards. I think at the investor day, you said $200 million benefit 2019, $300 million in 2020, and $600 million in 2021. Obviously, forecasts have been replaced. So, perhaps you could provide an update on that guidance.

My second question would be with respect to the asset management business, more specifically the existing revenue synergies you have in place with the rest of the group. I'm just trying to get a better feel for both the revenue contribution, the asset management business, and the rest of the group. I know 27% of the AUM is from UBS, GWM, and PNC, but also working the other way, the contributions to GWM from the asset management to session fees and other revenue sources. Thank you.

Kurt Gardner -- Group Chief Financial Officer

Yes. On the updated net interest income, I can't give you specific updated numbers. However, I would mention that since our investor update, we have seen the yield curve come down overall. As you saw in our beta factory summaries, there was about a 67-basis point overall reduction in the longer end of the yield curve. This, of course, will have an impact on our net interest income outlook.

Again, I don't have specific guidance for you. In addition to that, of course, any movement and balances since then will also have an impact. I would confirm that we are seeing the more than $300 million benefit from investment of equity and so, we're confident that that's going to continue to hold going forward. We'll get an update later for you.

In terms of the asset management, as you said, we, of course, see a benefit from distribution across GWM and PNC. As we highlight in our report, that's around 27% of our total invested assets within asset management. Now, there are also benefits both ways across other parts of the group. Those benefits were not specifically quantified. So, I can't comment on them specifically.

Andrew Coombs -- Citigroup -- Analyst

Just as a follow-up, a broader question on the asset management business -- would you like to provide any commentary on recent press articles?

Kurt Gardner -- Group Chief Financial Officer

No. We don't comment on any rumors or speculation.

Andrew Coombs -- Citigroup -- Analyst

Understood. Thank you.

Operator

The next question comes from Jon Peace with Credit Suisse. Please go ahead.

Jon Peace -- Credit Suisse -- Analyst

Thank you. My first question is on the CET1 outlook. Are there any headwinds to CET1 that you anticipate this year that might affect the timing of the buyback or should we assume that a third of the $1 billion might come in in each of the remaining three quarters. Then the second question is -- let's make it a high-level one on M&A -- can it ever make sense to you to be a long-term minority shareholder in one of your key businesses? Thank you.

Kurt Gardner -- Group Chief Financial Officer

Jon, on your first question, there's nothing on the horizon at the moment that would impede our ability to return capital. We don't know what new developments might emerge as we go through the quarter. As Sergio highlighted, what we will do is we'll look to pace our returns based on the evolution of beta factors as we go through each quarter.

Sergio Ermotti -- Group Chief Executive Officer

On the M&A side, we always say that we take a very pragmatic view of the world and look at the best way to create value for shareholders and clients at the same time, but it's quite a hypothetical scenario you're talking about. So, it's very difficult to comment. At the end of the day, I don't think anybody's in a position to think things are sacrosanct and we always need to consider what is the best. In that sense, we have to retain flexibility.

Operator

The next question comes from Anke Reingen with Royal Bank of Canada. Please go ahead.

Anke Reingen -- Royal Bank of Canada -- Analyst

Thank you very much. Two questions, please -- the first is on the operational [inaudible] assets increase of the $2.8 billion in the quarter. Can we conclude from this that the discussions with the FINMA on the potential implications from the French tax case are concluded? And then on cost control and cost [inaudible], I saw your compensation flexibility, the performance there in the first quarter versus third quarter was good as in flexible. Would you say is that a trend that continues or very much a result of your initiatives taken or is it more a function of the environment that would bounce back with a better revenue environment? Thank you very much.

Kurt Gardner -- Group Chief Financial Officer

Yes, Anke. In terms of your first question, we did go through an ad hoc update of our AMA model, which is the formally accepted model that we use to drive our operating risk RWA. We updated the parameters specifically for the France case. We discussed this with FINMA. FINMA acknowledged the increase. So, therefore we're comfortable that the $2.8 billion has been fully acknowledged.

Now, we will have an update as we typically do each year in the third quarter that will be a more complete update that could bring other movements to operating risk RWA.

Sergio Ermotti -- Group Chief Executive Officer

On cost, variable costs and comp flexibility -- yeah, the flexibility is there because our model is clearly focused on responding to the underlying trends in the business and if the profitability is not there to support compensation, we won't be shy of being disciplined and applying it. I think that's something that I believe is credible and sustainable. Of course, we need to consider competitive dynamics and I hope that that's at the end of the day the industry will converge and understand there is a need to reflect performance in the compensation framework of every bank. In that sense, we have been showing over the last few years a quite clear discipline in this matter.

Operator

The next question comes from Al Alevizakos with HSBC. Please go ahead.

Al Alevizakos -- HSBC -- Analyst

Two questions from my side as well -- so, the first question is basically on net new money. The performance was very strong for the overall group, 4%, at the top end of your target. When you look at the divisions, once again, the US continues to have outflows and it's such a big part of the business. Also, when I note the numbers, the advisors in the US continues to go down. So, how do you think about the next couple of years? Are you going to try to increase the hiring in order to grow the net new money? What do you think is the overall problem?

Then the second question is just to follow-up on the compensation. I can see that you use the flexibility in the IB, where you've actually reduced the benefits in line with the revenues. However, you didn't do the same in wealth management. So, do you expect the outlook for wealth is management is better than the IB for the rest of the year? Thank you.

Sergio Ermotti -- Group Chief Executive Officer

So, on net new money, first of all, considering the very strong quarter that is brought a reflection of the performance of the quarter and also our strategy, I can say that this measure is completely over-emphasized in general. We need to continue to look at quality of net new money and how it is translating to both profitability and invested assets over time.

Having said that, your point about the US is a fair one, but at the end of the day, you need to look at the other side of the coin with respect to the declining number of SAs. This is a strategic we took. A couple of years ago, we communicated clearly that we were driving the potential US headcount count below 7,000 and focused more on retention and the same store net new money dynamics.

Now, if I look at the competitive dynamics in the US in terms of net new money, we are the only ones reporting that, but there is a proxy to get back into looking at relative performance and the asset-based calculation. There, you can see that we are at the top of the performance. I think there is a clear market dynamic playing out for the wealth management industry in the US. We should not discount that.

Now, of course, we are looking to selective hiring initiatives to reinforce our model, which goes into the high-end of the financial advisor. As we mentioned, the ultra space, the GFO space, we see some momentum in those initiatives. Therefore, we will continue to look at ways to balance those growth indicators and new money with the profitability because the most important issue at the end of the day, our strategy plays out to the bottom line.

By deemphasizing recruiting as a way to show growth, that is only good for the top line but definitely not good for PBT because the recruiting loans and all the arrangements in the us to recruit people are basically diluting earnings. I think we have to do a balance here. I'm convinced that with our long-term initiatives, we will provide both growth in a sustainable way and protect the bottom line.

Kurt Gardner -- Group Chief Financial Officer

Perhaps I can address your second question, Al -- if you look at overall our expenses in global wealth management, they were down 5% and that was really all FA-grade comp and a bit of variable compensation. So, very much in line with the marginal change that we saw in recurring revenue and also in transaction-based revenue. We also highlighted that we generated saves from the actions that we took last year that we highlighted during our investor update. However, as we indicated, we've reinvested those saves strategically in the business for future alpha-related growth.

Al Alevizakos -- HSBC -- Analyst

Thank you very much.

Operator

Thank next question comes from Kian Abouhossein from JP Morgan. Please go ahead.

Kian Abouhossein -- JP Morgan -- Managing Director

Thanks for taking my questions. At the investor day October 25th, you had a slide where you clearly outlined the cost to income ratio toward 72% by 2021 and there clearly the assumption was made that revenues would grow 9%. You also gave some detailed targets around WM, 50% of operating profit growth will come from revenues, i.e. market environment, I should say. Clearly, the picture looks a bit more difficult today.

I'm not saying you should change your target and give me an update on overall targets, but I just want to understand the flexibility that you have, assuming that maybe the revenue environment will actually be different to get to that cost to income target. If you can talk a little bit about is there dynamic to still achieve these targets with a changing environment or considering what is said, i.e. you gave exact details, this is off if you don't get there at the end of the day.

The second question is really more of a general question around share price performance. You're aware of your performance relative to European banks. I'm just interested how you interpret that and how you interpret the de-rating of your valuation and what you think is the cause of that.

Sergio Ermotti -- Group Chief Executive Officer

Thank you. Kian, I see you are quite consistent with your focus on cost income ratio, which is an important measure for us as well. The picture is very simple. Of course, when you look at the dynamics supporting our cost income ratio target for 2021 are both levers that are in our control, the alpha and the beta that are best on not my opinion or Kurt's opinion on how we see the world, but rather from a consensus of economic outlook dynamics on growth.

So, in that sense, we made it always very clear that there is a very 50-50 split between how you contribute to growth on the topline of those two factors. If those two factors don't play out in the time that we were anticipating or was forecasted to happen, of course, we may not be able to fully achieve those targets. But the most important topic will always remain and we demonstrated in the first quarter -- how to balance this with our return on the capital we deploy.

So, it's very important to continue to look at that and the flexibility, where we do everything we can to go through this process in executing on our strategic cost initiatives. By the way, the first quarter indicated that we had flexibility on the cost side, both from the variable compensation but also from some of the operating cost adjustments and the tactical measures we're going to take will help us to mitigate the headwinds in achieving our target.

So, overall, I don't see anything that has fundamentally changed the long-term outlook on the macro picture and the one sustaining our business model. So, I believe achieving those targets, while challenging, is not out of reach. We just need a normalization of the market. I don't consider the last four or five months a normalized environment.

Now, in respect to the share price performance, I think I always mention it's very disappointing to look at how the share has been performing. If I look for sure until the end of 2018 while being absolutely no consolation to any of us, if I look at total shareholder return considering everything, I think that we have been performing definitely in line or above the peers that we believe are the reference peer for us.

In the first quarter of the year, my view is that of course, there are macro questions and geopolitical issues that have been affecting the industry that, in addition to the French matter, have contributed to a de-rating and underperformance of the stock. The way I see it, it's fairly simple. The market seems to indicate a 10% to 12% underperformance in total shareholder return year to date has been the $5 billion knockoff of our market cap, which happens to be the $5 billion of the French case.

Now, it is what it is. You know our position. I'm not going to go into that. We're going to have to work hard to fix that. Again, our relative valuation while we're being de-rated is still we trade at a premium to our peers and we trade not so far away to our US peers, which are our reference level. We need and we want to go back into where we belong to. But of course, it's very difficult for us to control the share price. That's something that we let you comment.

Operator

The next question comes from the line of Amit Goel with Barclays. Please go ahead.

Amit Goel -- Barclays -- Analyst

Good morning. Thank you. My first question was trying to understand the trends during the quarter on revenues, in particular in the global wealth management business. So, clearly the business reported right in line with the guidance that you gave, although it seems the transaction revenues were a bit better, offset by perhaps slightly weaker recurring fee margin.

So, I'm just curious if we could get a bit more commentary in terms of how the progression went and also the commentary -- I think you mentioned there was a bit of a shift toward lower margin mandates, so what you were seeing there and whether that's a temporary thing based on current market environments or if that's something you think may continue into Q2. Thank you.

Kurt Gardner -- Group Chief Financial Officer

Yes, Amit. If you look at how the quarter played out, clearly, as Sergio commented, there was a hangover of concern from the fourth quarter. The on top of that, you had the heightened concern regarding recession risk and what played out in Europe around Brexit and then of course China trade and broader concerns around China. That really was the predominant sentiment that we saw throughout January and February. That drove our transaction revenue down further than the 20% you currently see.

So, at that point through the end of February, we were down quite a bit more than the 20%. In addition, of course, the recurring revenue pattern just played out based on our invested asset balances at the end of the quarter with a little bit of uptick in the international businesses as we saw markets improve month by month. Then in March, particularly toward the midpoint of March, we started to see an improvement in client sentiment as some of the concerns around China's beta. We got closer and more optimistic about China trade resolution.

I think overall, the risk of recession also diminished a bit, particularly in the US and Asia Pacific. We saw clients a bit more active. In fact, if you look at March itself -- I mentioned this in my speech -- year on year, March was rather flat in terms of transaction revenue. So, that took us from being down a fair bit more than 20% to bouncing back overall for the quarter to being down just 20%. Then I also commented in my speech that we've kind of see that same pattern in March continue in April. We're still on a year on year basis at an OK place, April month to date.

The lower margin comment that I made, I think overall what we've seen is mandate sales are quite strong, but there are two overall observations in terms of the mix of those sales. Firstly, we're seeing sales into lower risk products. So, clients were actually buying contracted products, but the concentration of their investments was much more on the fixed income side, higher concentration of cash, less equities and less alternatives. That overall results in lower margin.

We'll see that fluctuate depending on whether or not they get more positive and they start to move their mandate concentrations into higher risk products that will help margin, but then the second trend we saw a higher percentage of advisory mandates versus management mandates. That also comes in at lower margin. Now, that trend going forward is going to depend on sales. So, certainly the lower margin that we saw playing out in the first quarter will be with us for the second quarter and then we'll have to see how that trend changes beyond the second quarter.

Amit Goel -- Barclays -- Analyst

The second question was just on the CET1 guidance, the plus-minus 30 BPs. Again, just curious, you highlighted you didn't see any particular headwinds over the course of the year. So, I'm just curious what could take the CET1 ratio down from the current 13% level toward the 12.7% and/or could the Q3 potential update on op risk, could that be one of the factors?

Kurt Gardner -- Group Chief Financial Officer

I think, Amit, if you look at what we highlighted, we do have some remaining increases from some other reg and some model updates, although we've absorbed most of those going forward, but we'll see a bit more of that over the next three quarters. In addition to that, we actually see the flexibility around the 13% also related to the pacing and timing of when we return capital, along with any investments that we make and the business where we see opportunities are going to be accretive economically.

Conversely, on the leverage ratio, we're indicating that we intend to stay above 3.7%. Now, you saw us at 3.8%. So, that says that we might come down from the 3.8% level a little bit, but still we anticipate being above the 3.7%, nothing specifically on the horizon that I would point toward that would suggest that it's going to drive us to below the 13%. It's really just indicative of the flexibility that we're highlighting that we're going to maintain as we go through the next several quarters.

Sergio Ermotti -- Group Chief Executive Officer

Yeah. Amit, maybe just adding on this topic -- if you think about in the last few years, we've always highlighted the fact that the 13% we started to flesh in 2011-2012 was a different nature of what we are today. In the meantime, we also say that we would not necessarily keep the 30% as sacrosanct reference level despite the regulatory inflation. So, somehow this is related also to that while, as Kurt just mentioned, the leverage ratio is our binding constraint.

Most importantly, I think that at the end of the day, what is important for is and I guess for regulators and everybody out there is the post-stress situation of the CET1 ratio. That's the measure of quality. We need to look at this isn't our next level of how we look at our absolute and relative capital position as always to take into consideration those dynamics. Binding constraints and post-stress.

Kurt Gardner -- Group Chief Financial Officer

Maybe just on the post-stress comment, if we run our overall stress process based on our regulator requirements, the LPA, we actually see that our post-stress numbers are much better than those published by our peers under ICAP in the UK or CCAR in the US. So, that also gives us comfort of the strength of our capital position overall.

Amit Goel -- Barclays -- Analyst

Thank you. Just the last point on that on the potential updates -- could those both be positive or negative? There's no particular bias there in terms of outcome.

Kurt Gardner -- Group Chief Financial Officer

As I mentioned, the French matter has been fully incorporated into our op risk RWA. I also highlighted the fact that we had discussions with our regulator that that op risk, the change was accepted by our regulator. There's nothing on the horizon that would lead me to assume there would be any further changes that would be a headwind for us.

I just mentioned that as we do every year, we'll do a full refresh of our op risk model in the third quarter. You might recall the refresh that we did last year actually resulted, I think, in about a $3.5 billion reduction in op risk overall. So, that's going to be the typical process of what falls out based on history and any new external events.

Operator

The next question comes from Magdalena Stoklosa with Morgan Stanley. Please go ahead, Madame.

Magdalena Stoklosa -- Morgan Stanley -- Managing Director

Thank you very much. My first question is on the potential for the upside to do the transactional activity actually here. Could you help us understand how do you see the potential upside after your very strong new money print? How do you see transactional levels following the net new money print, particularly in Asia developing from here? I know we've talked about March. We've talked about the beginning of April.

But I'm interested in your view slightly further out if we take into account what you see in your asset gathering activity. Maybe just for us to understand the quarterly evolution of the gross margin a little bit better in wealth because we all knew about the calculation effect of the US margins in one quarter and how some of it will be changed in the second quarter. But would be able to give us a little bit of a sense of how that year end calculation of the US margin impacted the gross margins overall? So, that's my first question.

My second question, Sergio -- if we remove away from the headlines, more strategically from the perspective of the asset management, how do you see your competitive positioning today versus what you wanted to achieve on this three or five-year view? I think on all kinds of key counts, the size, the product mix, the geographical mix and of course, the distribution strength as you see it. Thank you.

Kurt Gardner -- Group Chief Financial Officer

I didn't catch the full extent of your first question, but I'll comment on the parts that I did catch and if I miss something, please let me know. I think the upside is we have consistently indicated there are two important factors -- three factors, actually. The first is seasonality. Usually, the first quarter is our best quarter. You didn't see that play out, of course, because of the second factor, which is sentiment. Sentiment was really quite negative. I think if you look back on the beta factors slide that Sergio talked to, slide three, a new beta factor that we've introduced there is this notion of geopolitical uncertainty, which is quite industry.

You can see how that spiked in the first quarter. We've actually done a correlation on that index over the last number of quarters. Actually, there's very high negative correlation between transaction revenue and the geopolitical uncertainty index. So, that's indicative of how positive or negative our clients are feeling and that then gets expressed as to whether or not they're investing and therefore we see transaction revenue.

The third factor is more one that plays out over time and that's the concentration of mandates. We continue to increase the concentration of mandates. We are going to see somewhat of a transfer of revenue out of transactions and into recurring revenue, which could be a good thing because it comes at higher margin. There's better risk control. There's less volatility. That's positive overall. I didn't quite get your question about the margin about the US. I'm not sure...

Magdalena Stoklosa -- Morgan Stanley -- Managing Director

So, I think there were really kind of two points. One was I was wondering if you see such a strong net new money kind of activity, how does the transaction kind of follow? You answered part of it. That was particularly Asia was of interest to me. The second question in the first quarter, there was a negative impact of the way you calculate your US margins because they're effectively calculated on year-end numbers.

I just wondered whether -- of course, we know that almost arithmetically, this is going to look much better in the second quarter. I just wondered whether you could give us a sense of how much of a drag that US calculation was in 1Q.

Kurt Gardner -- Group Chief Financial Officer

You're absolutely right. So, the technical calculation on our margin does get impacted by how we bill. Since we bill based on a lack of facts -- so, the balances at the beginning of the year, which were quite low, but we didn't really see the reduction in recurring revenue play out until the first quarter. It's going to have an overall impact on the calculation of our margin. I don't know exactly what the impact was, but it certainly probably was a couple basis points. We'll have to get you back on that.

Specifically, I would comment on the correlation. There often is not tight correlation between transaction revenue and net new money. Net new money is generally going to be driven by episodic events, whether or not there's an IPO, inheritance, or other factors that will drive the levels of net new money. So, those aren't always correlated.

Magdalena Stoklosa -- Morgan Stanley -- Managing Director

It's just that I think there is a little bit more commentary in the market about the releveraging of the Asian clients and I thought I completely understand the big flows, the IP, the corporate activity related one, but I was wondering if some of the net new money is more coming out of cash and being prepared into being put into the market. Maybe that would react in a little bit more philosophy transactions. That was all I was hoping to get.

Kurt Gardner -- Group Chief Financial Officer

Magda, you're right. One of the components of net new money is the flow component, if you will, and that very much is impacted by leveraging. So, the deleveraging we saw in the second half of last year, particularly in Asia Pacific, very pronounced in the fourth quarter. That did directly impact on net new money. We didn't really see much in the way of leveraged movement either way in the first quarter. So, it wasn't a bit impact either positive or negative toward net new money in the first quarter.

Sergio Ermotti -- Group Chief Executive Officer

Actually, according to the survey we're going to publish on May 7th, our Asian investors or in general investors are willing to consider putting more money at work in the market as you will see. Asian investors declare cash balances is up to 35%. So, that's quite astonishing high number. The US is 25% if I remember correctly. So, basically, there is no indication whatsoever of releveraging by Asian investors. Actually, that's the reason why I mentioned before our strategic initiatives. We don't see the effect of loan growth contributing also to [inaudible], the fact of more inflows of cash for the reason that Kurt just mentioned.

Magdalena Stoklosa -- Morgan Stanley -- Managing Director

Thank you.

Sergio Ermotti -- Group Chief Executive Officer

In respect of the asset management question -- we are very pleased with the transformation we went through in the last few years as we outlined. If you look at on the cost side, our restructuring has allowed us to provide a good series of a couple of quarters of stable profits in the business. We are also happy with our strategic implementation of the key areas of growth in the sustainable space, ESG space, alternative investments.

Of course, we are also investing -- you ask if we are happy about our diversification and geographic and distribution footprints. We highlighted that wholesale is one area where we need to develop more. Of course, we would like to have a little bit more waiting into distribution on the wholesale. We are still depending on institutional money. So, I think that's something that we are working on.

But in general, as I mentioned in the past, the asset management business is part of an asset gathering story. It fits well into our wealth management business. Both in Switzerland and in Asia, we have very strong capabilities. I think in that sense, we will continue to look at ways to maximize our presence and growth.

Operator

The next question comes from Jernej Omahen with Goldman Sachs. Please go ahead, sir.

Jernej Omahen -- Goldman Sachs -- Analyst

I actually only have two questions -- the first one is on this net new money in Asia. Can you give us some more sense why the number was so big this quarter? What I mean by that is what is driving it? Which booking center is driving it? Whether you had any of these one-off events that you were highlighting in terms of large IPOs that are benefiting from this, etc. And if I understood correctly, there's no lump or loaf component within this -- if you could just confirm that as well again.

My second question is this -- I was listening to Sergio's explanation before about net new money conceptually and what drives it and how it's important that you get high-quality net new money in order to drive your bottom line. I'd like to ask the question slightly differently. In America, there were very few quarters -- I think it was two quarters over the past two years with positive net new money figures. Is it possible to grow bottom line in a wealth management business without positive net new money dynamics over the longer term? Thanks a lot.

Kurt Gardner -- Group Chief Financial Officer

Yeah. Thank you for both questions. If you look at Asia Pacific, you're right. As we explained to Magda's question, no leverage effect. We didn't see de-leveraging but we saw that in the fourth quarter that impacted negatively net new money in Asia Pacific. We saw one particular large inflow that was single-stock related, where we expect that that will then translate into diversified investment, potentially through leverage. In addition to that, we saw a broader base of smaller flows.

There was a relative high concentration of ultra overall, about 80%. We did see a fair bit of the net new money inflow in cash, which is consistent with the high cash component that our clients have. When we saw the cash come in, we generally saw 50% on top of that of other assets. Generally, when the cash does come in, we do see we retain a high proportion of that. We feel pretty good about how that's going to translate over time and it's a good business for us.

Sergio Ermotti -- Group Chief Executive Officer

Let me tackle that. First of all, if I look at the last couple of years to coincide with a change in our strategy on how we look in recruiting and enhancing bottom line for the reason I mentioned before. If you put the picture around that, we look, for example, something internally and we speak about same store net new money as an indicator of one of the KPIs we look at for growth. Therefore, net new money, I said before, is important, should not be over-emphasized but after the right waiting.

It is important to have net new money growth in the same store, but also, it's very important when we look at the growth of our business in the US to make it broader in terms of what we do with clients and open up all our capabilities that we have in place. The ultra and the GFO initiative is one of those, the banking products, loans, mortgages, and so on.

So, opening up client relationships to the full capabilities of the group is also a way for us to grow sustainably in the future. But of course, net new money will be a component. During a transformation like the one we had in the last few years, if we over-emphasize on this figure, it's clear that we will compromise the bottom line and not necessarily create long-term value.

Kurt Gardner -- Group Chief Financial Officer

Maybe to add to Sergio's point, if you look at what happened quarter on quarter, invested assets up overall $172 billion or 8%, $160 billion of that was market performance and only $22 billion net new money. So, often times, market movements are going to be a much more important factor for invested asset growth or potentially fall or declines, it would be much more of a driver of revenue than just net new money.

Operator

The next question comes from Stefan Stalmann with Autonomous Research. Please go ahead, sir.

Stefan Stalmann -- Autonomous Research -- Analyst

Good morning, gentlemen. I have two questions, please. The first one on the corporate center where you might guide for $250 million normal loss run rate -- is this only for 2019? Is it a longer-term guidance? I remember at the invest day, you were aspiring for about $800 million corporate center loss in 2021. So, is that guidance still relevant or has it been superseded? If it has been superseded, what accounts for the difference?

The second point relates to your dividend guidance, where you have tweaked the wording a little bit as you alluded in your presentation, Kurt, from mid to high single-digits to mid-single-digit growth. I guess pragmatically, the difference of 2 or 3 percentage points of growth amounts to less than $100 million in absolute terms. Why do you bother about changing this guidance, please?

Kurt Gardner -- Group Chief Financial Officer

I'll address the first one and Sergio will take the second. In terms of corporate center, the guidance from our investor update still holds. So, the 250 quarter is what we're indicating for the next three quarters this year. So, absent any movements in accounting, asymmetries are unusual games or litigation. We would still expect them overall. We've indicated we expect it to be between $900 million and $1 billion. We might do slightly better than that this year just because of the outperformance we saw in the first quarter.

Then over the next three years, we expect to see continued improvement so that $800 million number still stands and there are a number of initiatives and actions and changes in dynamics that give us pretty good confidence that we should be able to obtain that probably better than $800 million over the next three years.

Sergio Ermotti -- Group Chief Executive Officer

So, Stefan, if you look at page seven, you have a capital return policy and capital returns, which are two different ways. So, we haven't tweaked anything about our capital return policy wording. What we have been talking about, clearly, in a very clear way is we're going to implement that policy in 2019. So, I hope it's clear, the difference between the policy, which is a medium to long-term policy versus how we implement the policy within a year.

Stefan Stalmann -- Autonomous Research -- Analyst

Okay. Maybe as a follow-up, why do you bother clarifying the difference between the mid-single-digit and the mid to high single-digit percentage change for 2019 given that the difference is probably well below $100 million?

Sergio Ermotti -- Group Chief Executive Officer

Because we bothered to give you all the data points in order to make an accurate forecast.

Stefan Stalmann -- Autonomous Research -- Analyst

I should probably rephrase it and not ask why you bothered, but what has driven it?

Sergio Ermotti -- Group Chief Executive Officer

The driving force in assessing how much cash dividend we pay versus other forms of capital return, in this case of share buyback is also the share price. So, I think it's quite clear, at least to me, that we should favor, at this current share price levels, share buyback versus cash dividend growth. Having said that, cash dividend growth is part of our policy. Therefore, in this scenario, we favor the low end of a cash growth versus favoring more share buyback.

Even if it's not a lot of money and you are right, it's just a matter of principle. This is how the policy should work. If the share price would trade up substantially, you would see us doing the other way around or retain either cash or favor cash dividend, retain capital or favor cash dividend versus share buyback.

So, we're not going to buy back shares and not be sensitive. Otherwise, we can easily change the policy wording in that sense. I hope it's clear what is driving one or the other. I hope it's clear that we also want to make sure that people don't just assume a $0.05 or rapid multiplier necessarily, both ways, up or down.

Stefan Stalmann -- Autonomous Research -- Analyst

Okay. Thank you very much.

Operator

The next question comes from Jeremy Sigee with Exane. Your line is now open. Please go ahead.

Jeremy Sigee -- Exane -- Analyst

Thank you. Just a couple of real follow-ons, actually. You highlighted transaction revenues flat in March year on year and better in April, which sounds positive. Credit Suisse made some similar comments yesterday, but actually about overall group revenues being up in March and April. I wondered if you echoed that view more broadly across your revenue picture or whether there are any bits of your business that require a bit more caution in March and April in terms of the year on year trends. That's my first question.

My second question linked to that a little bit is can you talk a little bit about your planning cycle and the timing of decisions as you go through this year about whether you might need to make more structural adjustments to costs if revenues are tracking below expectations, what would be the timing of decisions that you might take on that as you go through the year?

Sergio Ermotti -- Group Chief Executive Officer

On the second question, let me tackle that one. The issue of attacking structural changes and cost and business, of course, we always need to be open and flexible about considering just one. If and when we get to the situation you just mentioned, we're definitely going to take action. As you can see, we already implemented a lot of strategic changes in respect of taking down our cost base and our business model late last year, coming into the year regardless of market conditions.

We will use tactical measures to offset tactical and cyclical movements in the market, but if we believe there is a structural change in the marketplace, we will think about how to best address it, but it's early to speculate. So, you should expect us to react, but not to panic. That's the one thing that we need to keep in mind, looking at how to protect both the bottom line but also growth and opportunities going forward.

In respect of the environment, it is what it is. Our view of the world is very realistic. I know in some cases, it gets confused with being pessimistic, but it's quite a view of how things play out. I think of course, we are very pleased with the fact that the last two or three weeks of March were much more positive than the rest of the year and we're entering into April with a more constructive environment, but to extrapolate anything out of this is way too early and I think that anybody who tried to do that in the past and also very recently, I think it was probably on the wrong side of the equation.

I would say that we need to stay realistic and focused to the fact that the volatility not only in the sentiment of investor is still very high and people are very cautious. As I mentioned before, for me, the most important benchmark when I look at our clients not only investing their cash in their portfolio, but also how they invest in their business seems to indicate a rather careful approach to how they see things. We need to work with this assumption also because at the end of the day, the opportunity cost to take any other views on this matter are so limited compared to the downside risk of being overly optimistic. That doesn't really make a difference.

Operator

The next question from the phone comes from Andrew Stimpson from Bank of America. Please go ahead, sir.

Andrew Stimpson -- Bank of America Merrill Lynch -- Analyst

Thank you. Good morning, everyone. So, first question on the IB and then the second one leverage please -- on the IB, I appreciate the IB performance is probably better than you expected in the middle of March, but still 7% and a bit is still a way from the target level from what is usually in the strongest quarter. I just want to know what happens if the IB doesn't represent the 15% ROA target for the year. I know that's a through cycle target. I just wondered the way you allocate it comes from the past, the IB always made it.

So, I just wondered what happens if they don't make the 15%. Then secondly on leverage, the liquidity coverage ratio went up considerably in the quarter. So, I just wondered what capacity there is for that to come down again as I assume that would be a pretty good help to your CET1 leverage, I imagine. If that can reduce, is that on top of the $20 billion optimization you already highlighted or would I be double-counting that, please? Thank you.

Sergio Ermotti -- Group Chief Executive Officer

Thanks, Andrew. On the performance of the IB, as you say, it is a quarter that is not only for us, I guess if you look around the entire industry compared to the largest players, I don't think you would describe that as a satisfactory outcome. So, we would need to see over the next few quarters, as I mentioned before to the previous question, are there any structural changes in the industry that goes through or to our business model that requires actions?

We will then evaluate based on that scenario if and how we should take some actions, but not only on a vertical basis looking at the IB business on a stand-alone, any actions we take always take into consideration what is the ramification to the rest of the businesses, not only for wealth management but for example also to our corporate business in Switzerland. Anything that we will do will continue to be aligned with making sure the IB over the cycle delivers its cost of capital and in good moments and in good cycles can over-deliver on that target.

But also, the strategic importance of our capabilities to the rest of the group cannot be underestimated. In that sense, it's going to be a balance of the two. Again, we are back into hypothetical questioning here. We'll address it if and when we see those trends being confirmed as a long-term hypothesis.

Kurt Gardner -- Group Chief Financial Officer

Yeah, Andrew, in terms of your leverage question, what drove up our LCR was a combination of issuance that we did kind of to get ahead of our overall funding calendar for the year and take advantage of attractive conditions. Secondly, the fact that there was low activity across the businesses resulted in an increased level of funding. We were holding centrally versus being deployed in the business divisions. Partway through the quarter, we did do a CD program to raise some cash.

Now overall, we would expect our LCR ratio to come down, naturally. We would hope that it comes down in line with increased activity, which would mean we're starting to see again some normalization. If you think about the optimization. Would it be a double count if you assume the LCR ratio comes down. Again, I would favor the LCR ratio coming down with an increased usage in the business division, which is part of our plans. Beyond that, we would look to optimize across the business divisions more and the legal entities more structurally.

Operator

The next question comes from Andrew Lim with Societe Generale. Please go ahead, sir.

Andrew Lim -- Societe Generale -- Analyst

Thanks for taking my questions. The first one is going back to your comments earlier, Kurt, on how AUM growth is sensitive to market movements. If we go back several years and look also to your 2018 investor day, we see the sensitivity to market moves is actually quite limited. I think you talked about back then in your investor day how net new money growth tends to be about 2% to 4%. This is over the period of 2014 to 2018. But AUM growth is slightly greater than that, about 6% to 8%.

So, the implied sensitivity from market movements is only about 3% to 4% a year. So, despite a really strong bull market rally in equities and credit AUM sensitivity to market movement is actually quite low. I was wondering if you could give some insights as to why you think that's the case.

Then the second question, just probing your strategy on buybacks this quarter -- you've done no buybacks this quarter despite capital ratios showing excess capital on the CET1 ratio leverage basis. We've had a first quarter which is typically the strongest quarter of the year, but no buybacks. I just wonder what is factored into your thinking there.

Kurt Gardner -- Group Chief Financial Officer

In terms of AUM, it's a mix of factors. I think if you look overall at longer term trends in equity markets, you would expect that about 60% to 65%, 30% to 35% would be the mix between market movements versus net new money. In addition to that, there's another factor which is dividends. Dividend payments actually do contribute, particularly in the US, to net new money growth. So, certainly combined market moves plus dividends is going to be a more important factor overall than net new money, but net new money is indeed important.

Sergio Ermotti -- Group Chief Executive Officer

On the buyback side, it's aligned to what we say. The aftermath of the French matter, we made it very clear that we had to come back to you as we did today with our refreshed strategy on how we're going to implement the 2019 capital returns plans and also because we had to go through internal governance processes, an external one with regulators in everybody in assessing what's covered in the respect of op risk, that's part of assessing our capital return capacity.

So, continue to implement a share buyback program while we were still debating this and say that we would come back to you was not coherent with the language. So, it's very simple. I think that was just a matter of waiting until all the relevant stakeholders were aligned in supporting and acknowledging our plans.

Andrew Lim -- Societe Generale -- Analyst

Okay. That's great. Thanks.

Sergio Ermotti -- Group Chief Executive Officer

Thank you very much. We will now close this call.

Operator

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

Duration: 85 minutes

Call participants:

Martin Osinga -- Head of Investor Relations 

Sergio Ermotti -- Group Chief Executive Officer

Kurt Gardner -- Group Chief Financial Officer

Andrew Coombs -- Citigroup -- Analyst

Jon Peace -- Credit Suisse -- Analyst

Anke Reingen -- Royal Bank of Canada -- Analyst

Al Alevizakos -- HSBC -- Analyst

Kian Abouhossein -- JP Morgan -- Managing Director

Amit Goel -- Barclays -- Analyst

Magdalena Stoklosa -- Morgan Stanley -- Managing Director

Jernej Omahen -- Goldman Sachs -- Analyst

Stefan Stalmann -- Autonomous Research -- Analyst

Jeremy Sigee -- Exane -- Analyst

Andrew Stimpson -- Bank of America Merrill Lynch -- Analyst

Andrew Lim -- Societe Generale -- Analyst

More UBS analysis

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.