UBS AG First Quarter 2025 Filing Summary
Business Context and Reporting Period
This Form 6-K filing covers the First Quarter 2025 report for UBS Group AG and UBS AG, with a reporting period ending March 31, 2025. The filing details the ongoing integration of Credit Suisse, which is on track for substantial completion by the end of 2026. Key recent developments include the sale of Select Portfolio Servicing (US mortgage servicing business) and the acquisition of Credit Suisse-branded card portfolios from Swisscard. The Group continues to navigate a volatile macroeconomic environment characterized by trade tariff uncertainties and geopolitical tensions.
Key Financial Metrics
| Metric | Q1 2025 | Q4 2024 | Q1 2024 |
|---|---|---|---|
| Total Revenues | USD 12,557m | USD 11,635m | USD 12,739m |
| Operating Profit Before Tax | USD 2,132m | USD 1,047m | USD 2,376m |
| Net Profit Attributable to Shareholders | USD 1,692m | USD 770m | USD 1,755m |
| Diluted EPS (USD) | 0.51 | 0.23 | 0.52 |
| Return on Equity (ROE) | 7.9% | 3.6% | 8.2% |
| Underlying Return on Tangible Equity | 10.0% | 6.6% | 9.9% |
| Cost/Income Ratio | 82.2% | 89.0% | 80.5% |
| Underlying Cost/Income Ratio | 77.4% | 81.9% | 77.2% |
| CET1 Capital Ratio | 14.3% | 14.3% | 14.8% |
| Liquidity Coverage Ratio (LCR) | 181.0% | 188.4% | 220.2% |
| Net Stable Funding Ratio (NSFR) | 124.2% | 125.5% | 126.4% |
Material Changes vs. Prior Comparable Period
- Profitability: Reported operating profit before tax decreased by 10% (USD 244m) compared to Q1 2024, driven by a 1% decrease in total revenues and a 1% increase in operating expenses. However, underlying operating profit before tax decreased only slightly by 1% (USD 31m) to USD 2,586m.
- Revenue Drivers: Net interest income and other net income from financial instruments decreased by USD 556m, largely due to lower accretion impacts from Purchase Price Allocation (PPA) adjustments. This was partially offset by a USD 285m increase in net fee and commission income, driven by positive market performance and higher client activity.
- Expenses: Operating expenses increased by USD 67m year-over-year. This included a USD 93m decrease in integration-related expenses, offset by higher personnel expenses (USD 83m increase) and general and administrative expenses (USD 18m increase), the latter including a USD 180m expense related to Swisscard transactions.
- Capital and Risk: Risk-weighted assets (RWA) decreased by USD 15.3bn to USD 483.3bn, aided by an USD 8.6bn reduction from the implementation of final Basel III standards. The CET1 capital ratio remained stable at 14.3%.
Guidance, Outlook, and Risks
- Outlook: Management expects net interest income (NII) in Global Wealth Management and Personal & Corporate Banking (in Swiss francs) to decline sequentially in Q2 2025. In US dollar terms, Personal & Corporate Banking NII is expected to increase by a mid-single-digit percentage. The effective tax rate for Q2 2025 is expected to be around zero due to tax planning measures.
- Share Repurchases: UBS completed USD 0.5bn in share repurchases in Q1 2025. The Group plans to repurchase an additional USD 0.5bn in Q2 and USD 2bn in the second half of 2025, maintaining an ambition for 2026 repurchases to exceed 2022 levels (USD 5.6bn).
- Integration Progress: Cumulative gross cost savings from the Credit Suisse integration reached USD 8.4bn, representing 65% of the USD 13bn ambition. The Non-core and Legacy division has reduced RWA by 60% since Q2 2023.
- Risks and Contingencies:
- Regulatory: Switzerland is considering legislative amendments that could significantly increase capital requirements. The implementation of final Basel III standards in Switzerland reduced RWA but increased the leverage ratio denominator.
- Legal: Significant litigation provisions exist for cross-border wealth management inquiries, Madoff-related matters, and benchmark rate manipulation. The aggregate estimated liability for litigation not covered by existing provisions is in the range of USD 0bn to USD 1.8bn.
- Geopolitical: Heightened trade tensions and conflicts in the Middle East and Russia-Ukraine war present risks to global growth and market volatility.
Key Facts for Investor Verification
- Underlying Performance: Verify the distinction between reported and underlying results, as PPA effects and integration costs significantly impact reported figures. Underlying cost/income ratio improved to 77.4%.
- Capital Requirements: Monitor the outcome of Swiss legislative proposals regarding foreign participations, which could materially increase capital requirements for UBS Group AG and UBS AG.
- Share Buyback Execution: Confirm the execution of the planned USD 2.5bn in share repurchases for the remainder of 2025, contingent on maintaining the CET1 target of ~14%.
- Non-Core Wind-down: Track the reduction of Non-core and Legacy RWA, which is targeted to be below USD 8bn by the end of 2025.
- Swisscard Transaction: Verify the net profit and loss impact of the Swisscard transactions (sale of 50% interest to American Express and purchase of card portfolios), which are expected to be neutral on a net basis in 2025.