UBS Group's Q1 2025: Unraveling Contradictions in Capital Strategy, Wealth Management, and Regulatory Impact

Capital distribution strategy, U.S. wealth management strategy and client recruitment, capital return and repurchase share, impact of regulatory changes are the key contradictions discussed in UBS Group's latest 2025Q1 earnings call.



Strong Financial Performance Amidst Market Volatility:
- UBS Group AG reported first quarter net profit of $1.7 billion, with an underlying return on CET1 capital of 11.3%.
- Growth was driven by positive operating leverage in core businesses, despite a challenging market environment characterized by investor sentiment shifts and significant market volatility.

Asset Gathering and Client Engagement:
- Global Wealth Management reported net new assets of $32 billion, reflecting a 3% annualized growth rate, with $7 billion of net new money in asset management.
- The growth was supported by client engagement, demand for mandate solutions, and strong performance in APAC and Americas regions, despite some client releveraging supported by lower interest rates.

Capital Management and Return:
- UBS accrued $500 million for share buybacks in Q1, with the intention to execute $2.5 billion more by year-end.
- This decision was made based on strong financial performance, progress in integration, and the current capital regime, reflecting confidence in ongoing financial targets and integration plans.

Challenges in Personal and Corporate Banking:
- Personal and Corporate Banking saw a 18% reduction in net interest income due to lower interest rates and a 23% decrease in pretax profit.
- Deposit pricing adjustments and balance sheet optimization efforts were implemented to mitigate the impact of rate decreases.

Progress in Non-core and Legacy Operations:
- Non-core and legacy units reduced their operational risk-weighted assets by $7 billion in the quarter, with a pretax loss of $200 million.
- This reduction was driven by successful physician exits across securitized products, credit, and macro, contributing to the strategic goal of reducing credit and market risk RWA.