UBS AG's Q1 2025 Results: Resilience Amid Integration and Strategic Momentum

UBS AG’s first-quarter 2025 financial results underscore its ability to navigate ongoing integration challenges with Credit Suisse while maintaining core strengths in wealth management and investment banking. Despite mixed performance across divisions, the Swiss banking giant reaffirmed its commitment to strategic targets, cost discipline, and capital resilience. Here’s a deep dive into the numbers and implications for investors.

Financial Resilience in a Challenging Landscape

UBS reported a net profit of $1.7 billion for Q1 2025, with an underlying profit before tax (PBT) of $2.6 billion—unchanged from the prior-year period. The underlying return on CET1 capital (RoCET1) of 11.3% reflects operational stability despite the complexities of integrating Credit Suisse. A key highlight is the 15% year-over-year growth in core division PBT, driven by robust performances in Wealth Management and Investment Banking.

Divisional Performance: Strengths and Weaknesses

1. Global Wealth Management: The crown jewel of UBS’s operations delivered a 21% PBT increase to $1.545 billion, fueled by $32 billion in net new assets. The division’s focus on fee-generating assets—$27 billion of which were added—highlights its ability to retain high-net-worth clients. This division is critical to UBS’s long-term growth, with a target of exceeding $5 trillion in invested assets by 2028.

2. Personal & Corporate Banking (PCB): This division lagged, with a 23% PBT decline to 597 million CHF, due to $2.9 billion in net deposit outflows from corporate and institutional clients. Lower net interest income further pressured results, signaling potential challenges in retail banking amid competitive market conditions.

3. Investment Bank: A standout performer, with 24% revenue growth year-over-year. Global Markets revenue surged 32%, and Advisory revenue rose 17%, particularly in Asia-Pacific. This division’s momentum positions UBS to capitalize on volatile markets and cross-border deal activity.

4. Asset Management: Despite a 4% drop in total revenues, PBT rose 15% to $208 million, driven by $7 billion in net inflows. Fixed Income and separately managed accounts (SMAs) proved resilient, illustrating the value of diversified product offerings.

Integration Progress: Milestones and Remaining Challenges

The Credit Suisse integration continues to yield tangible results:
- Cost Savings: Gross savings hit $8.4 billion (65% of the $13 billion 2026 target).
- Non-Core Reduction: Risk-weighted assets (RWA) in the Non-Core & Legacy (NCL) division fell $7 billion quarter-over-quarter to $34 billion, with a target of $24 billion by end-2026.
- Operational Efficiency: 48% of NCL IT applications were decommissioned since mid-2023, streamlining operations.

However, the final merger of Swiss entities (planned for Q3 2024) and full integration of Credit Suisse’s global footprint remain critical steps to realize synergies.

Capital and Liquidity: A Fortress Balance Sheet

UBS maintained a CET1 ratio of 14.3%, comfortably above its 14% target, while total assets dipped slightly to $1.543 trillion. Liquidity metrics—LCR of 181% and NSFR of 124%—reflect strong risk management. The reduction in RWA to $483.3 billion underscores progress toward Basel III compliance and lower risk exposure.

Strategic Outlook: Ambitious but Achievable?

UBS has set aggressive targets:
- Underlying RoCET1 of 15% by 2026 (up from 11.3% in Q1 2025).
- Cost/income ratio below 70% by 2026, and a reported RoCET1 of 18% by 2028.
- Global Wealth Management assets to surpass $5 trillion by 2028.

These goals hinge on sustaining Wealth Management’s growth, optimizing costs, and resolving NCL risks. While PCB’s struggles and macroeconomic uncertainties pose headwinds, UBS’s capital strength and integration progress provide a solid foundation.

Conclusion: A Bank Built for Long-Term Resilience

UBS’s Q1 results demonstrate a strategic focus on leveraging its wealth management dominance while navigating integration challenges. With $8.4 billion in cost savings already realized and a CET1 ratio above target, the bank is positioned to capitalize on its strengths. The 15% RoCET1 target by 2026 appears attainable given core divisional resilience, and the $5 trillion wealth management goal is within reach if client confidence remains intact.

Investors should monitor PCB’s deposit trends and the completion of the Credit Suisse merger. However, UBS’s fortress balance sheet, disciplined cost management, and leadership in global wealth management make it a compelling long-term play in an uncertain financial landscape. For now, the numbers suggest UBS is steering through integration with clarity—and that bodes well for sustained profitability.