UBS Group AG results failed to dispel investor anxiety about risks from previously canceled Credit Suisse bonds, the potential impact of Swiss capital reforms and the lender’s involvement in the First Brands bankruptcy, overshadowing a set of earnings that broadly beat expectations.
Chief Executive Officer Sergio Ermotti played down the risks to the bank from potential client losses on investments in the auto supplier, while Chief Financial Officer Todd Tuckner attempted to bat away questions over the bank’s possible liability in a Swiss legal case over the 2023 write down of Credit Suisse bonds.
The Zurich-based bank said net income in the third quarter of the year was $2.5 billion, compared with a consensus for $1.4 billion. The result was supported by a release of provisions related to the settlement of a tax evasion case in France and a legacy Credit Suisse legal issue.
Inflows at the key wealth management unit jumped to $38 billion.
“The focus currently is the potential legal risk for UBS” stemming from a recent court ruling concerning the AT1 bonds, JPMorgan Chase & Co. analyst Kian Abouhossein said by email. “It seems UBS cannot get a break. Management is doing a superb job in the merger and has excellent operational results.”
Earlier this month a Swiss court delivered a ruling that added fresh legal uncertainty to UBS with regard to the 2023 emergency rescue of Credit Suisse. In a surprise move, the Federal Administrative Court said Switzerland’s 2023 order to wipe out some $17 billion in AT1 convertible bonds issued by Credit Suisse was unlawful.
The ruling doesn’t yet mean that the decision will be reversed, and in any case a potential resolution in which compensation would be paid out remains years away. UBS said Wednesday that it plans to appeal the court decision.
“In our view there should be no liability in this matter,” the bank said in a Q&A it published on its website. “As a consequence, there is no need to record a provision.”
First Brands
UBS operates funds through which investors had been exposed by around $500 million to the First Brands bankruptcy — raising questions over risk management.
Ermotti countered such claims, arguing that investors knew they were getting into a high-yield strategy and that jitters in the market over financial firms’ involvement were overdone.
“It’s not the first time that somebody goes bust or Chapter 11, and it doesn’t mean every time that somebody has done something wrong,” Ermotti said in an interview with Bloomberg Television’s Guy Johnson. “So I think that there is a little bit of a witch-hunting.”
UBS shares were down 0.7% at 12:54 p.m. in Zurich, having initially gained as much as 4% after the open.
Underlying revenue at the investment bank gained 23% as trading and advisory enjoyed a surge in deal-making that has also buoyed Wall Street peers. The unit delivered its highest quarterly revenues on record, at $3.24 billion, driven by gains in both Global Banking and Global Markets.
Still, equity trading growth lagged U.S. peers, with 15% gains where U.S. banks saw an aggregate 22% growth on year, according to Bloomberg Intelligence.
Inflows in wealth management were driven by a strong Asia performance.
The Americas wealth result was dented by an outflow of $9 billion, amid an up-tick in departures of financial advisors in the region. UBS has raised the payouts earned by its wealth advisors in the U.S., with the aim of retaining and hiring personnel at a time of intense competition for talent, Bloomberg has reported.
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| Key figures (in USD) | 3Q 2025 | 3Q 2024 | 3Q Estimate |
|---|---|---|---|
| Net income | 2.48b | 1.43b | 1.41b |
| Revenue | 12.7b | 12.3b | 12.1b |
| IB pre-tax income | 900m | 405m | 426.6m |
| Wealth pretax income | 1.35b | 1.09b | 1.46b |
| CET1 ratio (%) | 14.8% | 14.3 | 14.6 |
A bigger issue for UBS than First Brands is the ongoing standoff with the Swiss political establishment over demands for substantially higher capital. The lender is facing years of uncertainty as legislation makes its way through parliament, with a worst-case outcome leading to a requirement increased by some $26 billion over the coming years.
Ermotti has previously guided that he will serve as CEO until the integration of Credit Suisse is complete, around the end of 2026 or early 2027. But the need to tussle with Swiss politicians over the coming years to fend off what UBS has characterized as an “extreme” capital demand means that some senior figures would welcome Ermotti staying longer, Bloomberg reported earlier this week.
In its outlook, UBS said that fourth quarter activity in the investment bank is likely to normalize compared with a strong period a year ago. Valuations are elevated across most asset classes, it said, and investors are increasingly focused on hedging downside risks.
UBS has launched a previously announced share buyback of as much as $2 billion for the second half of this year, remaining on track for a total this year to $3 billion. The bank said its CET1 ratio at the end of this year will reflect accruals for buybacks in 2026.
“The magnitude of this buyback will depend on the year-end planning process, progress on Credit Suisse migration and ongoing consultations on Swiss proposed capital requirements,” analysts at Citigroup Inc. including Andrew Coombs wrote in a note.
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