Strong Trading Quarter Yet Mixed Economic Outlook

UBS reported a first-quarter net profit of 1.7 billion, surpassing analyst predictions of 1.3 billion, even though it marks a slight decline from the previous year’s 1.8 billion. The bank’s Global Markets unit recorded a remarkable 32% increase in revenues, driven by heightened client activity in both equities and foreign exchange, leading to a 2% uptick in UBS shares.

Tariff Concerns Cloud Growth and Net Interest Income Expectations

Despite exceeding expectations, UBS expressed caution: President Trump’s sweeping tariffs pose a material risk to global growth and inflation, making the trajectory for interest rates more complex. The bank now expects a decline in net interest income across its Global Wealth Management and Swiss sectors in Q2 2025.

Market Volatility Threatens Deal Activity

UBS also noted that ongoing market turbulence may hold back M&A and capital-markets transactions as corporations hesitate to initiate deals. Management commented that with a wide array of possible outcomes, the economic landscape remains exceptionally unpredictable.

Valuation Perspective: Potential Upside in Banking Sector

Even with today’s gains, UBS’s valuation remains attractive compared to its peers. According to Entreprenerdly’s Sector P/E Ratio API, European banks trade at around 8 times forward earnings, against a 10 times average for global financial institutions, suggesting that easing tariff pressures could present further growth opportunities.