UBS Q1 earnings 2025

Swiss giant UBS on Wednesday beat bottom line expectations amid sharp returns in investment banking while warning of the global trade impact of sweeping U.S. tariffs as it seeks to rein in steep share declines.

Net profit attributable to shareholders hit $1.692 billion in the first quarter, compared with a mean forecast of $1.359 billion in a LSEG poll of analysts. Group revenue over the stretch stood at $12.557 billion, versus analyst expectations of $12.99 billion.

Other first-quarter highlights included:

Return on tangible equity reached 8.5%, versus 3.9% in the fourth quarter.CET 1 capital ratio, a measure of bank solvency, was 14.3%, unchanged from the December quarter.

The lender said it delivered a 32% year-on-year hike in revenues of the global markets unit of its investment banking arm, largely driven by “higher client activity in equities and FX with gains across all regions.” It also achieved a 15% hike in transaction-based hike in income in its key global wealth management unit.

Speaking to CNBC’s Carolin Roth on Wednesday, UBS CEO Sergio Ermotti recognized a “challenging environment” in the first quarter, with a spate of “definitely extremely volatile” first few weeks in April that underpinned spikes in the volume of transactions that at times exceeded Covid-19 levels by 30%.

Critically, the lender posted $1.629 billion in its net interest income (NII) — the difference between earnings from loans and investments and the payments on deposits —  down 16% year-on-year and 11% from the fourth quarter, guiding for further declines in the June quarter.

“In the second quarter we expect net interest income (NII) in Global Wealth Management to decline sequentially by a low single-digit percentage, and we see a similar decline in Personal & Corporate Banking’s NII in Swiss francs. In US dollar terms, Personal & Corporate Banking’s NII is expected to increase sequentially by a mid-single-digit percentage, based on current foreign exchange rates,” UBS said.

Investors are keenly watching these metrics as European banks transition to an environment of monetary easing, particularly in Switzerland, which has been combating a strong franc and depressed inflation with interest rates as low as 0.25%.

Ermotti said he is “not overly concerned” about interest rate movements.

“I think that we are now in a situation where it’s almost like a neutral, fairly boring zone,” he noted. “If rates go up or down from here in Swiss francs, then we’re going to see a potential pick up in NII. But it’s premature to talk about if and when this will materialize.”

Separately, UBS on Wednesday confirmed it had completed $500 million in share buybacks and intended to press ahead with a $2.5 billion repurchase plan for the remainder of 2025.

“Overall a decent set of results, albeit boosted by non-core gains and heightened trading activity in both IB and GWM, all of which may not be sustainable, whereas NII has missed expectations again,” Citi analysts said in a Wednesday note after UBS reported.

Deposed this month as continental Europe’s largest bank by market capitalization by Banco Santander, UBS has suffered share declines of roughly 10% in the year to date, with the brunt of losses logged after the White House’s imposition of tariffs on global trade partners on April 2.

Switzerland faces a 31% duty if it fails to agree a more conciliatory trade deal by the end of Washington’s 90-day reprieve in early July. Comparatively, the European Union was hit with 20% in U.S. levies.

Tensions with Washington and a potential recessionary outlook for the world’s largest economy spell trouble for the Swiss banking giant and its money-spinning global wealth management division, with around half of UBS’ invested assets concentrated in the broader Americas region last year.

“Rapid and significant changes to trade tariffs, heightened risk of escalation and significantly increased macroeconomic uncertainty led to major market volatility in the first weeks of April,” UBS said Wednesday. “With a wide range of possible outcomes, the economic path forward is particularly unpredictable. The prospect of higher tariffs on global trade presents a material risk to global growth and inflation, clouding the interest rate outlook.”

It flagged the possibility of “further spikes in volatility” as markets remain sensitive to new tariffs-led developments, noting that “Prolonged uncertainty would affect sentiment and cause businesses and investors to delay important decisions on strategy, capital allocation and investments.”

“You look at the last 10 days or so, I think there is a little bit of fatigue coming in. I think that investors are now waiting in a wait-and-see mode. Markets have settled down … people are waiting for significant news,” UBS’ Ermotti told CNBC. “But I do expect spikes of volatilities to come back as positive or negative news unfold.”

The picture of UBS’ long-term profitability remains darkened by questions over potential new — and more draconian — capital requirements from Swiss authorities, which have questioned the Swiss titan’s “too big to fail” status since its absorption of collapsed domestic rival Credit Suisse. The transaction — which one politician at the time dubbed the “deal of the century” — has propelled UBS down the path of maximum resistance against further restrictions, which it argues would undermine its competitiveness as an already adequately capitalized entity.

“UBS’s lobbying is both visible and unmistakable. It’s clearly resonating in various places. But once again: the Federal Council cannot be intimidated by lobbying, but must also represent the interests of taxpayers,” Swiss President Karin Keller-Sutter told broadcaster SRF last month, according to a Google translation.

“The Federal Council has one goal: that in the event of a crisis, a UBS that is systemically important is resolvable. This means that the systemically important parts of the bank can be separated in Switzerland. That must be the goal of the Federal Council and the new legislation.”

UBS is expected to engage with the Swiss Federal Council over any proposed capital requirement changes in June.

Speaking about UBS’ odds of competitiveness in the broader Swiss regulatory environment, Ermotti said, “We are not magicians. We are not going to be able to be competitive and provide and be an engine of growth for the financial center, but also for the economy, if the regulatory framework is not competitive.”