UBS(US:UBS)2025-08-28 11:05Financial Performance - The total group profit before tax for Q2 2025 was $2.7 billion, a 30% increase year-over-year, with core businesses growing combined pre-tax profits by 25%[28] - Group revenues increased by 4% to $11.5 billion, with core franchises up by 8%, while operating expenses decreased by 3% to $8.7 billion[28] - The reported EPS for Q2 was $0.72, with a return on CET1 capital of 15.3% and a cost/income ratio of 75.4%[29] - Global Wealth Management (GWM) reported a pre-tax profit of $1.4 billion, up 24% year-over-year, with a cost/income ratio improvement of almost 4 percentage points to 77%[10] - The Investment Bank delivered a profit before tax of $526 million, up 28%, with revenues increasing by 13% to $2.8 billion[70] - Asset Management's profit before tax was $216 million, down 5% year-over-year, but up 8% excluding prior year gains[65] - Non-core and Legacy's pre-tax profit was $1 million, with negative revenues of $83 million, while operating expenses were down 46% year-over-year excluding litigation[76] Client Activity and Growth - Invested assets reached $6.6 trillion, with significant client activity across all regions, and $18 billion in client commitments attracted year-to-date in the Unified Global Alternatives unit[7][8] - The company granted or renewed 40 billion Swiss francs in loans during the quarter, supporting client activity globally[9] - GWM's net new assets reached $55 billion year-to-date, with $23 billion generated in the second quarter, reflecting a growth rate of 2.2%[47] - Recurring net fee income grew by 8% to $3.4 billion, supported by over $60 billion in net new fee-generating assets over the past 12 months[53] - Transaction-based income increased by 11% to $1.2 billion, with revenues from investment funds and cash equity offerings rising by 27% and 17%, respectively[54] - Profit growth in the Americas was 48%, with a pre-tax margin of 12.4%, while EMEA saw a 30% increase in profit before tax[46] Cost Management and Efficiency - The company achieved 70% of its gross cost save ambition, totaling $9.1 billion in cumulative savings since the end of 2022[33] - UBS has achieved approximately 70% of its cost reduction target, with a remaining goal of $4 billion in gross cost savings, split between technology and personnel[116] - The company is focused on maintaining an underlying cost income ratio below 70% as part of its efficiency initiatives[116] Capital and Regulatory Position - The CET1 capital ratio at the end of June was 14.4%, with a tangible equity increase to $82 billion, driven by net profit and FX translation[13][37] - The company expects a return on CET1 capital of around 15% and a cost/income ratio of less than 70% for 2026, maintaining a strong capital position amid regulatory discussions[24][39] - The average capital requirement is 10.9%, compared to a proposed minimum of 19%, highlighting the regulatory challenges ahead[93] - UBS is focused on understanding the implications of capital proposals and will not engage in mitigation actions until clarity is achieved[100] - The parent bank CET1 ratio is expected to remain above the target range of 12.5% to 13% due to FX volatility impacting leverage ratios[107][109] Integration of Credit Suisse - The integration of Credit Suisse is on track, with 400,000 client accounts migrated from the Credit Suisse platform in Switzerland and plans to migrate an additional 500,000 by year-end[12] - UBS recognizes the operational challenges and risks associated with the integration of Credit Suisse, which is expected to continue through 2026[120] - UBS plans to repatriate additional capital as a result of integrating Credit Suisse, contributing to a lower capital ratio by the end of 2023[98] Market and Economic Outlook - The company expects GWM's net interest income to decrease by a low single-digit percentage compared to 2024, reflecting ongoing challenges in the interest rate environment[57] - UBS's US operations are leveraging international capabilities to enhance service offerings and create synergies within Wealth Management[112] - The company is cautious about forward-looking statements due to various risks, including geopolitical tensions and regulatory changes[120] Client Sentiment and Recruitment - Client momentum in Asia is strong, with robust activity despite some tactical repositioning and a wait-and-see sentiment due to macro uncertainties[105] - 90% of financial advisors (FAs) are up in T12 production, with increased recruitment and retention efforts at UBS[85] - UBS aims to achieve mid-teens return on pretax profit margins in Wealth Management, indicating a focus on profitability improvement[111]