UBS

UBS AG Form 6-K Summary: 30 June 2025 Pillar 3 Report

Business Context and Reporting Period

This Form 6-K filing, dated August 28, 2025, discloses the 30 June 2025 Pillar 3 Report for UBS Group AG and its significant regulated subsidiaries. The report details regulatory capital, risk-weighted assets (RWA), leverage, liquidity, and funding metrics in accordance with the final Basel III standards implemented in Switzerland on January 1, 2025. The filing covers the UBS Group consolidated level as well as standalone and consolidated data for UBS AG, UBS Switzerland AG, UBS Europe SE, UBS Americas Holding LLC, and Credit Suisse International.

Key Financial Metrics (UBS Group Consolidated)

Material Changes vs. Prior Period

• Capital Growth: CET1 capital increased by USD 3.6 billion quarter-over-quarter, driven by operating profit before tax of USD 2.2 billion and foreign currency translation gains of USD 2.3 billion. This was partially offset by dividend accruals and tax expenses.
• RWA Expansion: Total RWA rose by USD 21.2 billion to USD 504.5 billion. The increase was primarily due to credit risk RWA (+USD 18.6 billion) and counterparty credit risk RWA (+USD 1.8 billion), largely influenced by currency effects and asset size movements.
• Leverage Ratio Decline: The leverage ratio decreased to 5.53% as the leverage ratio denominator (LRD) grew by USD 96.5 billion to USD 1.66 trillion, mainly due to currency effects (+USD 88.1 billion).
• Liquidity Position: The LCR improved to 182.3%, supported by a USD 40.0 billion increase in high-quality liquid assets (HQLA). The NSFR decreased slightly to 122.4% due to a larger increase in required stable funding compared to available stable funding.

Guidance, Outlook, and Regulatory Developments

• Share Repurchases: UBS launched a new program on July 1, 2025, to repurchase up to USD 2 billion of shares, with completion planned for the second half of 2025. The previous USD 2 billion program concluded in May 2025.
• Capital Targets: Management maintains a target CET1 capital ratio of around 14% and aims for an underlying return on CET1 capital of around 15% and a cost/income ratio of less than 70% by the end of 2026.
• Swiss Regulatory Proposals: The Swiss Federal Council published proposals in June 2025 to strengthen banking stability. If implemented as proposed, these measures (including full deduction of investments in foreign subsidiaries) could require UBS AG to hold an additional estimated USD 24 billion in CET1 capital. This would result in a pro-forma CET1 ratio of around 19% at the Group level.
• Basel III Implementation: The final Basel III standards, including the Fundamental Review of the Trading Book (FRTB), are fully effective in Switzerland. The output floor is currently set at 60% and is not binding for UBS as of June 30, 2025.

Key Facts for Investor Verification

• Regulatory Capital Adequacy: Verify that the CET1 ratio of 14.41% comfortably exceeds the minimum requirement plus buffers (approx. 4.13% total buffer requirement), leaving a significant surplus.
• Impact of Swiss Proposals: Assess the potential impact of the proposed Swiss regulatory changes, which could necessitate an additional USD 24 billion in capital, significantly altering the capital structure and potentially limiting future capital returns.
• Output Floor Exposure: Monitor the gap between modeled RWA (USD 504.5 billion) and standardized RWA (USD 750.7 billion). While the 60% output floor is not currently binding, the gap narrows as the floor phases in to 72.5% by 2028.
• Liquidity Resilience: Confirm that the LCR (182.3%) and NSFR (122.4%) remain well above FINMA prudential requirements, indicating strong liquidity buffers despite the increase in net cash outflows.
• Share Buyback Execution: Track the execution of the new USD 2 billion share repurchase program announced in July 2025 against the backdrop of potential new capital requirements.