UBS Group AG (UBS.US) reported better-than-expected Q1 profits, but the impact of tariffs still casts a shadow over the outlook.

UBS Group AG (UBS.US) announced its first quarter financial report for 2025 before the US market opened on Wednesday, with net profit higher than expected. However, the Swiss bank warned that global economic growth faces uncertainty due to US President Donald Trump's comprehensive imposition of tariffs. Despite the turbulent market driving an increase in its trading business revenue, the outlook remains uncertain. The financial report data shows that UBS Group AG's first-quarter revenue was $12.557 billion, lower than analysts' expected $12.99 billion, and net profit attributable to shareholders was $1.7 billion, lower than the $1.8 billion in the same period last year, but higher than analysts' average expectation of $1.3 billion. UBS Group AG's first quarter also had other highlights, with a return on tangible assets of 8.5%, higher than the previous quarter's 3.9%; in addition, the common equity Tier 1 capital adequacy ratio (CET 1), a measure of a bank's ability to service its debt, was 14.3%, unchanged from the fourth quarter of last year. UBS Group AG stated that its global market business revenue in the investment banking department increased by 32% year-on-year, mainly benefiting from "increased activity in stock and foreign exchange business clients across regions, achieving overall profitability." The bank's net interest income (NII) was $1.629 billion (net interest income refers to the difference between loan and investment income and interest paid on deposits), a 16% decrease compared to the same period last year, an 11% decrease from the previous quarter, and further expected to decline in the second quarter. UBS Group AG stated, "Net interest income for global wealth management business in the second quarter is expected to decrease by 1%-3% compared to the previous quarter; net interest income for Swiss personal and corporate banking business (in Swiss francs) will also see a similar decline. Calculated at current exchange rates, net interest income for personal and corporate banking business (in US dollars) is expected to increase by 4%-6% compared to the previous quarter." The bank added that ongoing market uncertainty may delay corporate transactions. With European banks turning to a loose monetary environment, particularly with Switzerland maintaining interest rates at a low of 0.25% to counter a strong Swiss Franc and low inflation, investors are closely monitoring these indicators. Clouds of tariffs loom At the same time, due to the uncertainty brought about by President Trump's large-scale tariff policies, the bank's outlook has become even bleaker. UBS Group AG pointed out, "The prospect of higher tariffs in global trade poses significant risks to global inflation, making the prospects for interest rates uncertain." Earlier this month, Spain's Banco Santander S.A. Sponsored ADR surpassed UBS Group AG in market value, seizing the position as the largest bank on the European continent. Since the beginning of the year, UBS Group AG's stock price has fallen by about 10%, with most of the decline occurring after the White House imposed tariffs on global trading partners on April 2nd. If Switzerland fails to reach a more reconciliatory trade agreement with the US before the end of the 90-day buffer period given by the United States in early July, they could face a 31% tariff. In comparison, the EU faces a 20% tariff rate from the US. The strained relationship with the US and the prospect of the world's largest economy slipping into a recession have brought troubles to this Swiss banking giant and its profitable global wealth management department. Last year, about half of UBS Group AG's investment assets were concentrated in the Americas. Despite the uncertain outlook, UBS Group AG reiterated its stock buyback plan for 2025, stating that it had repurchased $500 million in stocks in the first quarter and reserved $2.5 billion for buybacks for the remainder of the year. Furthermore, market volatility combined with Swiss regulators' demand for UBS Group AG to hold more capital has put pressure on its stock price. It is expected that the government will propose banking regulatory reform in June. Swiss authorities have promised to introduce stricter banking regulations to prevent a repeat of the 2023 Swiss Credit crisis, when UBS Group AG took over Swiss Credit in an emergency acquisition.