Economic Indicators - UBS has identified that recession risks in the United States are increasing, with three main indicators showing concerning trends: real-world data, credit conditions, and the yield curve [1][2] - The probability of a US recession based on real-world data has risen to 46%, an increase of 12 percentage points in just one month, indicating broad-based weakness in key economic areas [4][3] - The yield curve currently suggests an 18% probability of recession, which, while lower than previous extremes, still represents a notable increase [5] Credit Conditions - UBS's credit-based model indicates a 48% probability of recession, marking the highest level since the pandemic, reflecting shifts in financial ratios and lending conditions [6] Composite Recession Risk - The composite gauge from UBS places the overall US recession risk at 37%, up from 26% in December, approaching levels historically associated with actual downturns [7] - Despite these indicators, UBS does not currently predict a recession, noting that the economy began the year on stable footing, but warns that further data deterioration could reignite recession discussions [7] Global Implications - The US consumer remains a critical driver of global demand, and any retrenchment in consumer spending or business investment could negatively impact the developed world [9] - The situation is being closely monitored, with upcoming data in May and June expected to influence market narratives significantly [10]

UBS Group AG’s (UBS) subsidiary, UBS Asset Management (Americas) LLC, has announced a definitive agreement to sell O’Connor, its hedge fund, private credit, and commodities business, to Cantor Fitzgerald as part of its ongoing strategy to streamline operations.The initial close of the transaction is expected during the fourth quarter of 2025, subject to regulatory approvals and other customary closing conditions.Details of UBS’s Divestiture DealThe sale includes six investment strategies with approximately ...

It has been about a month since the last earnings report for UBS (UBS) . Shares have added about 5% in that time frame, underperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is UBS due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.How Have Estimates Been Moving Since Then?It turns out, estimat ...

Core Viewpoint - Fitch Ratings has upgraded the outlook of UBS Group AG to Positive from Stable, affirming its long-term Issuer Default Rating (IDR) at 'A' and UBS AG's and UBS Switzerland AG's at 'A+' due to the successful integration of Credit Suisse and expected improvements in profitability [1][2]. Group 1: Integration and Execution Risk - Execution risk for UBS is expected to decline as the integration of Credit Suisse progresses, with minimal residual risk anticipated after client migration and system decommissioning, expected to be completed by the end of 2026 [2]. - UBS has effectively managed integration risks over the past two years, preventing operational disruptions and maintaining a prudent risk culture, with the wind-down of non-core assets ahead of schedule [3]. Group 2: Business Model and Profitability - The integration of Credit Suisse is projected to enhance UBS's business model by increasing scale and diversifying revenue, supporting its strategy and leadership in global wealth management [4]. - Fitch anticipates UBS's profitability will recover to pre-acquisition levels by 2026, with the operating profit/risk-weighted assets ratio expected to rise from 0.2% in 2023 to 2.5% in 2026 and 3% in 2027 [5]. Group 3: Financial Strength and Stability - UBS's capital position remains robust, with a CET1 ratio expected to exceed the medium-term guidance of 14% until integration completion, and it maintains one of the highest Basel leverage ratios among European banks [6]. - The liquidity coverage ratio (LCR) was reported at 181% in Q1 2025, indicating a stable funding profile [6]. Group 4: Risk Management - UBS is expected to continue effectively managing integration risks, ensuring stable operations and minimizing disruptions, with a loans-to-deposits ratio improving to 83% in Q1 2025 [7]. - The bank's low impaired loans ratio of close to 1% reflects its prudent risk culture, significantly better than its European peers [7]. Group 5: Overall Outlook - The Positive Outlook from Fitch indicates expectations for UBS to restore profitability to pre-acquisition levels while maintaining strong asset quality, solid capital, and resilient funding [8]. - UBS's successful integration of Credit Suisse is anticipated to durably strengthen its business model, reinforcing its leading position in global wealth management [8].

Core Viewpoint - UBS Group AG is experiencing steady net interest income growth and is pursuing an expansion strategy, but faces legal issues and rising expenses that are concerning [1]. Group 1: Growth Drivers - UBS has expanded its geographical footprint through strategic partnerships and acquisitions, including the acquisition of Credit Suisse in June 2023, enhancing its capabilities in wealth and asset management [2]. - In April 2025, UBS formed a strategic partnership with 360 ONE WAM Ltd, acquiring a 4.95% share and selling its onshore Indian wealth business to 360 ONE, while continuing to serve clients in Singapore [3]. - UBS is making significant progress in integrating Credit Suisse, aiming for $13 billion in gross cost reductions by the end of 2026, having already merged 95 branches in Switzerland and migrated over 90% of client accounts outside Switzerland to UBS platforms [4]. Group 2: Financial Position - As of March 31, 2025, UBS maintains a strong capital position with a CET1 capital ratio of 14.3% and a CET1 leverage ratio of 4.4%, both exceeding management guidance [5]. - The company's net interest income (NII) has shown a 4.9% CAGR over the past four years, although it fell in Q1 2025 due to lower loan margins and deposit spreads, with expectations for improvement driven by repricing strategies and loan demand [6]. Group 3: Challenges - UBS faces significant legal challenges, including class action lawsuits from former Credit Suisse shareholders and a recent settlement of $511 million related to a U.S. Department of Justice tax probe, which will impact profitability [7]. - The company's expense base has been rising, with a CAGR of 14.3% over the past four years, driven by personnel, administrative expenses, and integration costs, which may affect near-term profitability [8]. Group 4: Market Performance - Over the past six months, UBS shares have gained 2.4%, underperforming the industry growth of 23.7% [10].

Group 1: UBS Tax Probe Settlement - UBS Group AG has agreed to pay $511 million to resolve a tax probe by the U.S. Department of Justice against Credit Suisse for preparing false income tax returns and tax evasion [1] - The DOJ's two-year investigation found that Credit Suisse aided tax evasion through 475 offshore accounts, concealing over $4 billion from the IRS, with most misconduct occurring between 2014 and June 2023 [2] - Credit Suisse was found guilty and liable to pay $371.9 million as part of the settlement, along with an additional $138.7 million related to undeclared U.S.-linked accounts in its Singapore unit [3] Group 2: UBS Integration and Cost Management - UBS is facing challenges and legal claims post-acquisition of Credit Suisse, increasing its costs, but is on track to complete the integration by the end of 2026 [5] - In the first quarter of 2025, UBS consolidated its branch network in Switzerland, merging 95 branches since the July 2024 merger, with business migrations planned to complete by the first quarter of 2026 [6] - UBS realized an additional $0.9 billion in gross cost savings in the first quarter of 2025, with cumulative savings amounting to $8.4 billion, representing around 65% of its goal to achieve $13 billion in annualized exit rate gross cost savings by the end of 2026 [7] Group 3: UBS Stock Performance - Over the past three months, UBS Group shares have lost 7.2%, while the industry has seen an 8.8% rise [13]

Core Viewpoint - UBS Group AG has formed a strategic partnership with General Atlantic to enhance private credit opportunities, focusing on direct lending solutions for clients and borrowers [1][2]. Partnership Details - The collaboration aims to broaden access to direct lending and credit products by leveraging UBS's advisory and investment banking capabilities alongside General Atlantic's global network [2]. - The partnership will primarily focus on senior secured direct lending financing for companies in North America and Western Europe, with General Atlantic leading a private credit team [3]. Rationale Behind the Partnership - This strategic collaboration is intended to strengthen UBS's Investment Bank's private market capabilities, particularly in providing private credit solutions to large- and mid-cap companies in the Americas [4]. - The partnership aligns with UBS's growth targets for its Global Banking capital markets platform, enhancing its reach and capabilities in the private credit sector [4]. Leadership Statements - Sergio P. Ermotti, CEO of UBS, expressed enthusiasm for the partnership, highlighting the shared commitment to client-centric solutions and the combined strengths of both firms in private credit investing and asset management [5]. Market Context - UBS shares have experienced a decline of 4.2% over the past six months, contrasting with a 17% rise in the industry [7]. - UBS currently holds a Zacks Rank 3 (Hold), indicating a neutral outlook in the market [8]. Industry Comparisons - Other financial institutions are also expanding their presence in the private credit market, with JPMorgan announcing a $50 billion allocation for direct lending and Citigroup partnering with Apollo Global Management for a $25 billion private credit program [9][12].

Core Viewpoint - Credit Suisse Services AG will pay over $510 million in penalties for aiding U.S. taxpayers in evading taxes through offshore accounts, as part of a guilty plea and non-prosecution agreement with the Department of Justice (DOJ) [1][2]. Group 1: Financial Penalties and Agreements - The total amount of over $510 million includes penalties, restitution, forfeiture, and fines related to the bank's actions [2]. - The guilty plea and non-prosecution agreement involve conspiring to hide over $4 billion in assets held by wealthy clients through offshore accounts [2][3]. - Credit Suisse's non-prosecution agreement specifically addresses undeclared accounts worth over $2 billion held at Credit Suisse AG Singapore from 2014 to June 2023 [6]. Group 2: Conduct and Violations - Credit Suisse Services AG conspired with employees and U.S. customers to willfully aid in concealing ownership and control of assets from January 2010 to July 2021 [3]. - The bank provided offshore private banking services that facilitated the hiding of assets from the IRS, violating a previous 2014 plea agreement [5]. - Prior to the settlement, the U.S. Senate Finance Committee found that Credit Suisse violated its 2014 agreement by continuing to assist in tax evasion, concealing over $700 million from the government [9]. Group 3: UBS Involvement - UBS, which acquired Credit Suisse in March 2023, stated it was not involved in the underlying conduct and has a zero-tolerance policy for tax evasion [10]. - UBS has committed to cooperating with ongoing investigations and providing further information about U.S. accounts as part of the agreement [8]. - The acquisition of Credit Suisse was driven by concerns of its potential collapse, and UBS aims to resolve legacy issues promptly [12][10].

Core Points - Credit Suisse Services AG will pay approximately $511 million to settle a criminal case related to conspiring with American taxpayers to conceal over $4 billion in at least 475 offshore accounts [1][2] - The conspiracy enabled ultra-high-net-worth and high-net-worth individual clients to evade U.S. tax obligations from 2010 to 2021, violating a previous plea agreement made in May 2014 [2] - The company pleaded guilty to conspiracy charges in U.S. District Court and entered into a non-prosecution agreement regarding U.S. accounts booked at Credit Suisse AG Singapore [3] - Credit Suisse AG Singapore held undeclared accounts for U.S. persons, with total assets exceeding $2 billion, from 2014 to June 2023 [4]

Core Viewpoint - UBS Group AG reported a slight decline in net profit for Q1 2025, driven by strong performances in its key divisions despite challenges from increased operating expenses and credit loss expenses [1][2]. UBS' Revenues & Expenses - Total revenues for Q1 2025 decreased by 1.4% year over year to $12.6 billion [2] - Operating expenses rose marginally year over year to $10.3 billion [2] - Total credit loss expenses were reported at $100 million, a decline of 5.6% from the previous year [2] UBS Group Business Divisions' Performance - Global Wealth Management's operating profit before tax increased to $1.4 billion, up from $1.1 billion year over year [3] - Asset Management's operating profit before tax rose by 21.6% to $135 million [3] - Personal & Corporate Banking reported a decrease in operating profit before tax to $607 million, down 37.7% year over year [3] - The Investment Bank unit's operating profit before tax increased by 30.1% to $722 million [3] Non-Core & Legacy Performance - Non-Core & Legacy incurred an operating loss before tax of $391 million, compared to a loss of $46 million in the prior year [4] - Group Items reported an operating loss before tax of $299 million, an improvement from a loss of $320 million in the year-ago quarter [4] UBS' Capital Position - Total assets decreased by 1.4% from the previous quarter to $1.54 trillion [5] - Return on Common Equity Tier 1 (CET1) capital improved to 9.6% as of March 31, 2025, compared to 9% a year earlier [5] - Risk-weighted assets declined by 8.2% year over year to $483.3 billion [5] - CET1 capital decreased by 10.9% year over year to $69.1 billion [5] - Invested assets increased by 5.2% year over year to $6.2 trillion [5] Capital Distribution Update - A dividend of 90 cents per share was approved and paid out to shareholders on April 17, 2025 [6] - UBS completed $0.5 billion in share repurchases in Q1 2025 and plans an additional $0.5 billion in Q2 2025, with a target of up to $2 billion in the second half of 2025 [7] Credit Suisse Integration Progress - UBS is on track to complete the integration of Credit Suisse by the end of 2026 [8] - The consolidation of its branch network in Switzerland has progressed, with 95 branches merged since the merger in July 2024 [9] - UBS realized an additional $0.9 billion in gross cost savings in Q1 2025, with cumulative savings reaching $8.4 billion, representing around 65% of its goal for $13 billion in annualized savings by the end of 2026 [10] Overall Assessment - UBS's inorganic growth efforts are expected to support its top line, with significant progress in the integration of Credit Suisse and a robust capital position [11]