Business Context and Reporting Period
This Form 6-K filing, dated May 8, 2025, contains the Pillar 3 Report for UBS Group AG and its significant regulated subsidiaries for the period ended March 31, 2025. The report details regulatory capital, risk-weighted assets (RWA), leverage ratios, and liquidity metrics in accordance with the final Basel III standards, which entered into force in Switzerland on January 1, 2025. The filing covers UBS Group AG consolidated, UBS AG consolidated and standalone, UBS Switzerland AG standalone, UBS Europe SE consolidated, UBS Americas Holding LLC consolidated, and Credit Suisse International standalone.
Key Financial Metrics (UBS Group Consolidated)
| Metric | Value (USD) | Ratio / % |
|---|---|---|
| Common Equity Tier 1 (CET1) Capital | 69.2 billion | 14.31% (CET1 Ratio) |
| Total Tier 1 Capital | 87.8 billion | 18.18% (Tier 1 Ratio) |
| Total Risk-Weighted Assets (RWA) | 483.3 billion | - |
| Leverage Ratio Denominator (LRD) | 1,561.6 billion | 5.62% (Basel III Leverage Ratio) |
| Total Loss-Absorbing Capacity (TLAC) | 187.2 billion | 38.73% (of RWA) |
| Liquidity Coverage Ratio (LCR) | - | 181.0% (Quarterly Average) |
| Net Stable Funding Ratio (NSFR) | - | 124.2% |
Material Changes vs. Prior Period
- Capital Movements: CET1 capital decreased by USD 2.2 billion to USD 69.2 billion. This decline was driven by a net share repurchase effect of USD 3.0 billion (including actual repurchases and capital reserves for future buybacks) and dividend accruals of USD 0.8 billion, which offset operating profit before tax of USD 2.1 billion and foreign currency translation gains of USD 0.8 billion. Tier 1 capital increased slightly by USD 0.1 billion due to a USD 2.3 billion increase in Additional Tier 1 (AT1) capital.
- Risk-Weighted Assets (RWA): Total RWA decreased by USD 15.3 billion to USD 483.3 billion. Key drivers included a USD 8.6 billion reduction from the implementation of final Basel III standards, a USD 11.4 billion decrease from asset size movements (unwinding Non-core and Legacy exposures), and a USD 1.1 billion reduction from model updates. These were partially offset by a USD 5.9 billion increase due to currency effects.
- Leverage Ratio: The leverage ratio decreased to 5.62% from 5.77% in the prior quarter. The LRD increased by USD 42.1 billion, primarily due to a USD 28.8 billion increase from Basel III implementation and USD 26.5 billion from currency effects.
- Liquidity: The quarterly average LCR decreased 7.4 percentage points to 181.0%, driven by a USD 12.7 billion decrease in High-Quality Liquid Assets (HQLA). The NSFR decreased 1.3 percentage points to 124.2%.
Guidance, Outlook, and Management Commentary
- Capital Returns: Shareholders approved a dividend of USD 0.90 per share on April 10, 2025. UBS completed USD 0.5 billion in share repurchases in Q1 2025. The company plans to repurchase an additional USD 0.5 billion in Q2 2025 and USD 2.0 billion in the second half of 2025. The ambition for 2026 repurchases is to exceed full-year 2022 levels of USD 5.6 billion, subject to maintaining a CET1 ratio target of around 14%.
- Regulatory Implementation: The adoption of final Basel III standards in Switzerland resulted in a net USD 8.6 billion reduction in RWA. The output floor (currently at 60%) is not binding for the UBS Group as of March 31, 2025. In the EU, Basel III requirements are applicable, though FRTB implementation is delayed to at least January 2026. In the US, the timing of final Basel III rules remains uncertain.
- Regulatory Risks: The Swiss Federal Council is expected to launch a public consultation on measures to strengthen financial stability, including the capital treatment of foreign participations. If adopted, these proposals could require UBS to hold significantly higher capital levels, though the ultimate impact cannot yet be assessed.
Key Facts for Investor Verification
- Share Repurchase Execution: Verify the completion of the planned USD 0.5 billion repurchase in Q2 2025 and the subsequent USD 2.0 billion in H2 2025, ensuring they align with the 14% CET1 target.
- Basel III Output Floor Impact: Monitor the phase-in of the output floor (increasing to 72.5% by 2028) and its potential future binding effect on RWA and capital ratios.
- Swiss Regulatory Changes: Track the outcome of the Swiss Federal Council's consultation on foreign participation capital treatment, which could materially increase capital requirements.
- Liquidity Trends: Observe the continued decline in HQLA and LCR to ensure they remain comfortably above FINMA prudential requirements amidst lower customer deposits.
- Legacy Asset Wind-down: Confirm the continued reduction in RWA from Non-core and Legacy assets as part of the post-Credit Suisse integration strategy.