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UBS Delivers a Solid First Quarter — Investment Banking Leads the Charge

Swiss multinational investment bank UBS beat earnings expectations in the first quarter of 2025, posting a net profit of $1.692 billion, well ahead of the $1.359 billion consensus forecast by LSEG analysts. The surprise beat was fueled by a 32% year-over-year surge in global markets revenue, primarily driven by robust equity and foreign exchange (FX) trading across all geographies.

The investment banking division saw a significant uptick in activity as clients responded to market volatility and shifting macroeconomic trends. This marked a notable turnaround from previous quarters and indicated that investor appetite is rebounding in certain key asset classes, especially amid early signs of global monetary easing.

Group-wide, UBS posted revenue of $12.557 billion, slightly below analyst expectations of $12.99 billion, but market reaction remained positive due to improved profitability and strategic share buybacks.

Key Financial Metrics Reflect Strength and Stability

• Return on Tangible Equity (ROTE): 8.5%, up from 3.9% in Q4 2024
• CET1 Capital Ratio: 14.3%, unchanged and comfortably above regulatory thresholds
• Net Interest Income (NII): $1.629 billion, down 16% year-over-year and 11% from Q4, with further softening expected in Q2

UBS acknowledged that its net interest income will continue to decline in some segments. Specifically, the Global Wealth Management arm is projected to see a low single-digit percentage dip, while Personal & Corporate Banking in Swiss francs will face similar pressure. However, in U.S. dollar terms, that same division expects a mid-single-digit increase, thanks to favorable currency movements.

Shareholder Rewards: Buybacks and Capital Returns

UBS continues to return capital to shareholders even amid regulatory scrutiny. The bank confirmed it had completed $500 million in share buybacks during Q1 and reiterated plans to repurchase an additional $2.5 billion worth of shares throughout the remainder of 2025. This aligns with UBS’s broader strategy to bolster investor confidence and manage capital efficiently following its acquisition of Credit Suisse.

Mounting Geopolitical Risk: The Tariff Storm Brewing in Washington

Despite its strong quarterly performance, UBS’s outlook is clouded by rising geopolitical risks — particularly the U.S. administration’s renewed push for tariffs on international trade partners, including Switzerland.

As of early April, the White House imposed a sweeping set of tariffs impacting European exporters. The European Union has already been hit with 20% tariffs, while Switzerland faces a 31% levy if a revised bilateral trade agreement isn't reached by early July, the end of Washington’s 90-day negotiation window.

UBS shares have dropped nearly 10% year-to-date, with a significant portion of that decline occurring after the tariff announcement on April 2. Analysts and investors fear that new trade barriers could hinder economic growth, increase inflation, and ultimately tighten corporate margins — all of which directly affect the bank’s revenue-generating divisions, especially global wealth management.

Wealth Management at Risk Amid U.S. Economic Uncertainty

UBS's flagship Global Wealth Management division, which manages trillions in client assets, is particularly vulnerable to trade tensions and macroeconomic instability. Around 50% of UBS’s invested assets were concentrated in the Americas in 2024, leaving the firm exposed to shifts in U.S. policy, recessionary risks, and client sentiment.

The bank noted in its quarterly release:

“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. The economic path forward is particularly unpredictable.”

UBS also flagged the potential for "further spikes in volatility" and a slowdown in strategic decisions by businesses and investors alike — a common market response during periods of extended geopolitical tension.

Regulatory Crosswinds: Pressure Mounts at Home in Switzerland

Domestically, UBS is navigating a different kind of risk — regulatory reform. After its emergency takeover of Credit Suisse in 2023, the bank now faces calls for stricter capital rules and structural separation of core banking functions to ensure financial system resilience in future crises.

Swiss President Karin Keller-Sutter commented in an interview with SRF last month:

“The Federal Council cannot be intimidated by lobbying. It must also represent the interests of taxpayers. In the event of a crisis, a systemically important UBS must be resolvable.”

The Swiss government is currently reviewing new legislation that could mandate structural separation of UBS’s domestic banking operations — a move that UBS argues would reduce efficiency and threaten its global competitiveness.

UBS’s public lobbying efforts have intensified, with executives warning that additional capital requirements would not only weaken the bank’s competitive edge but also contradict its already strong solvency metrics.

The Big Picture: A Solid Quarter, but Rough Waters Ahead

UBS’s Q1 performance shows that the bank remains a powerhouse in global banking, particularly in investment markets. However, a combination of tariff threats, softening NII, and looming regulation presents a complex road ahead.

Markets will be closely watching:

• U.S.-Swiss trade negotiations over the next two months
• The Federal Reserve’s monetary policy signals amid rising inflation
• Swiss legislative outcomes on banking regulation
• The performance of UBS’s wealth management division in a volatile global economy

Despite the hurdles, UBS remains profitable and well-capitalized — but the months ahead may be more about political and regulatory navigation than trading desks and interest margins.

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