UBS 2025 Q1 Financial Performance: Unveiling the Numbers

Swiss banking powerhouse UBS officially reported on Wednesday that it surpassed bottom-line predictions thanks to significant gains in investment banking, although it raised alarms about the global trade repercussions stemming from extensive U.S. tariffs as it works to manage sharp declines in stock value.

In the first quarter, the bank recorded a net profit of $1.692 billion for shareholders, exceeding the average analyst prediction of $1.359 billion according to an LSEG survey. The total group revenue during this period amounted to $12.557 billion, which was slightly lower than the analysts’ forecast of $12.99 billion.

Additional highlights from the first quarter included:

• Return on tangible equity reached 8.5%, compared to 3.9% in the previous quarter.
• The CET 1 capital ratio, a measure of a bank’s financial stability, remained steady at 14.3%, the same as in the last quarter.

The bank announced that it experienced a 32% annual increase in revenue in the global markets segment of its investment banking division, primarily driven by “increased client activity in equities and foreign exchange across all regions.” It also saw a 15% rise in income from transactions in its vital global wealth management department.

In a conversation with CNBC’s Carolin Roth on Wednesday, UBS CEO Sergio Ermotti acknowledged the “challenging environment” during the first quarter, noting that the initial weeks of April were “definitely extremely volatile,” leading to transaction volumes that sometimes surpassed Covid-19 levels by 30%.

Notably, the bank reported net interest income (NII) of $1.629 billion — the difference between what it earns from loans and investments versus what it pays on deposits — which was down 16% year-on-year and 11% from the previous quarter, projecting further declines for the upcoming June quarter.

“In the second quarter, we anticipate a slight decrease in net interest income (NII) within Global Wealth Management, whereas we expect a similar decline in Personal & Corporate Banking’s NII when observed in Swiss francs. In U.S. dollars, however, we expect a moderate increase in Personal & Corporate Banking’s NII,” UBS stated.

Investors are closely monitoring these metrics as European banks adapt to a phase of monetary easing, particularly in Switzerland, where low inflation and a strong franc have resulted in interest rates being as low as 0.25%.

Ermotti expressed that he is “not overly concerned” about changes in interest rates.

“Currently, it seems we are entering a neutral, relatively stable zone,” he mentioned. “Should rates rise or fall from this point in Swiss francs, we may see an uptick in NII. However, it would be premature to predict when that might happen.”

Additionally, UBS confirmed it had executed $500 million in share buybacks and is set to proceed with a $2.5 billion repurchase program through 2025.

“Overall, these results are decent, but they are bolstered by non-core gains and increased trading activity in both investment banking and global wealth management, which may not be sustainable. NII has again fallen short of expectations,” noted Citi analysts in a Wednesday commentary following UBS’s report.

The bank’s stock rose by 1.64% at 08:30 a.m. London time.

Recently dethroned by Banco Santander as continental Europe’s largest bank based on market capitalization, UBS has experienced stock declines of about 10% this year, especially following the imposition of tariffs on global trade partners by the White House on April 2.

Switzerland faces a steep 31% duty if it fails to negotiate a more favorable trade agreement before the end of Washington’s 90-day grace period in early July. In contrast, the European Union is facing a 20% duty from the U.S.

The strained relations with Washington and a looming recession for the world’s largest economy pose challenges for UBS and its lucrative global wealth management arm, with almost half of UBS’s invested assets located in the broader Americas market last year.

“Rapid and notable shifts in trade tariffs, increased risk of escalation, and a significant rise in macroeconomic unpredictability resulted in considerable market volatility during the early days of April,” UBS stated on Wednesday. “With numerous potential outcomes ahead, the economic trajectory is notably uncertain. The likelihood of elevated tariffs on global trade presents a genuine risk to both global growth and inflation, complicating the outlook on interest rates.”

The bank indicated the possibility of “further increases in volatility” as markets respond to new tariff developments, adding that “Extended uncertainty could dampen sentiment, prompting businesses and investors to postpone crucial decisions related to strategy, capital allocation, and investments.”

“In the last ten days or so, I sense a bit of fatigue setting in. Investors seem to be adopting a more cautious approach, awaiting significant news. Markets have calmed down… everyone is waiting for impactful developments,” Ermotti remarked to CNBC. “However, I do anticipate periodic spikes in volatility will return as both positive and negative news comes to light.”

The future profitability outlook for UBS remains clouded by concerns over the potential for stricter capital regulations from Swiss authorities. These authorities have scrutinized UBS’s “too big to fail” status since it absorbed the now-defunct Credit Suisse. This transaction, which one politician termed the “deal of the century,” has led UBS to resist further restrictions, claiming that they would compromise its competitiveness as an already well-capitalized institution.

According to Swiss President Karin Keller-Sutter, “UBS’s lobbying efforts are clear and impactful across various areas. However, it’s important to note that the Federal Council must not be swayed by these lobbying attempts and should prioritize the interests of taxpayers,” as reported by broadcaster SRF last month via Google translation.

“The Federal Council has a single aim: to ensure that, during a crisis, a systemically important UBS can be managed responsibly. This entails the ability to separate critical segments of the bank within Switzerland. This should be the focus of the Federal Council and any new legislation.”

UBS plans to discuss potential changes to capital requirements with the Swiss Federal Council in June.

Commenting on UBS’s ability to remain competitive within the Swiss regulatory landscape, Ermotti remarked, “We aren’t magicians. Without a competitive regulatory environment, we won’t be able to thrive and drive growth for the financial center, as well as for the wider economy.”