In a strong performance for the first quarter, UBS reported a net profit attributable to shareholders of $3 billion, marking an 80% increase year-on-year and exceeding analysts’ estimates of $2.8 billion according to a consensus poll compiled by LSEG. The Swiss banking and asset management firm also saw its common equity tier 1 (CET 1) capital ratio rise to 14.7%, slightly up from 14.4% in the previous quarter, indicating improvements in their solvency measures.
As part of its ongoing capital management strategy, UBS announced plans to repurchase $3 billion in shares, having already bought back $900 million during the first three months of the year. The bank signaled intentions to pursue further share buybacks by the end of the year.
While UBS acknowledged that the market environment remains “resilient” amidst geopolitical tensions, particularly the ongoing Middle East conflict, the firm also cautioned that risk levels are “elevated.” They projected that the second quarter net interest income for both global wealth management and personal and corporate banking divisions is likely to be “broadly flat.”
CEO Sergio Ermotti reflected on the bank’s solid quarterly performance, emphasizing resilience against external pressures, including tensions related to the U.S.-Iran conflict. He noted that market sentiment suggests a resolution is forthcoming. In an interview on CNBC’s “Squawk Box Europe,” Ermotti highlighted robust growth in UBS’s equity capital markets operations, stating that the bank has experienced “good momentum across the board.”
Ermotti reported double-digit growth in profitability across all business sectors, with underlying profits before tax reaching $3.9 billion for the quarter, a 54% increase compared to the same period last year, far surpassing analyst expectations which had forecasted $3.2 billion.
The global wealth management division recorded net new assets amounting to $37 billion by the quarter’s end, representing a 3.1% annualized growth. The asset management sector reported net new money inflows of over $14 billion, a 2.7% increase year-on-year.
In light of recent regulatory developments in Switzerland aimed at preventing banking failures similar to that of Credit Suisse, UBS will be required to maintain an additional $20 billion in capital reserves. The bank has pushed back against these proposed regulatory changes, which would allocate investments held by its foreign subsidiaries separately from the overall group-wide CET1 capital.
Ermotti addressed concerns regarding the private credit market, asserting that UBS does not foresee any significant disruption or issues. He characterized the firm’s exposure in this space as “well diversified” and consisting of “good quality” assets, making up approximately 0.5% of its total balance sheet. While some funds are experiencing stress, the CEO described the challenges as more related to liquidity rather than fundamental performance issues.
