Ladies and gentlemen, good morning. Welcome to the UBS First Quarter 2025 Results. The conference must not be recorded for publication or broadcast. [Operator Instructions]. At this time, it's my pleasure to hand over to Sarah Mackey, UBS Investor Relations. Please go ahead, madam.

Good morning, and welcome, everyone. Before we start, I would like to draw your attention to our cautionary statement slide at the back of today's results presentation. Please also refer to the risk factors included in our annual report, together with additional disclosures in our SEC filings. On Slide 2, you can see our agenda for today. It's now my pleasure to hand over to Sergio Ermotti, Group CEO.

Thank you, Sarah, and good morning, everyone. Our strong results in the first quarter demonstrate once again our ability to deliver for stakeholders in different market conditions. The quarter was characterized by a substantial shift in investor sentiment and growth expectations alongside periods of significant market volatility. This damped the positive seasonal effect that we typically experienced at the start of the year and tempered the bullish outlook the market had coming out of 2024 and into the first few weeks of January. Against this backdrop, these results reflect the power and scale of our diversified global franchise, our unwavering commitments to clients, disciplined cost management and the substantial progress made in integrating Credit Suisse. All this is underpinned by a balance sheet for all seasons. First quarter net profit reached $1.7 billion, and our underlying return on CET1 capital stood at 11.3%, supported by positive operating leverage in our core businesses. Net new inflows onto our asset gathering platform were robust, including $32 billion in net new assets in Global Wealth Management and $7 billion net new money in asset management. Although we haven't seen a major strategic shift in asset allocation, the breadth and depth of our advice and global capabilities help clients protect their wealth and navigate the market volatility. We saw significant demand for mandate solutions, structured products, and alternatives including new offerings within our unified global alternatives units where total assets reached nearly $300 billion. For our clients in Switzerland, we kept delivering on our commitment to be a reliable partner. During the quarter, we granted or renewed CHF 40 billion of loans. In the Investment Bank, we continue to execute on our capital light strategy. Investments we made in our areas of strategic importance allowed us to win further market share. Global markets achieved…

Thank you, Sergio, and good morning, everyone. Throughout my remarks, I'll refer to underlying results in U.S. dollars and make year-over-year comparisons unless stated otherwise. During the first quarter of 2025, our core businesses grew their combined pretax profitability by 15% on strong positive operating leverage. Overall, our group profit before tax was $2.6 billion, down 1% year-on-year. Group revenues were broadly flat at $12 billion and up 6% across our core franchises. Operating expenses were also stable at $9.2 billion as we continue to successfully reduce our non-production related costs across the group, offsetting higher financial adviser and variable compensation accruals in the quarter. Our EPS was $0.51, and we delivered an 11.3% return on CET1 capital and a cost/income ratio of 77.4%. As illustrated on Slide 6, this quarter's underlying performance demonstrates the strength of our franchise and diversified business model, particularly in challenging and complex markets. By supporting clients in ways that differentiate UBS, while maintaining a sharp focus on cost and resource efficiency, each of global wealth management, asset management and the investment bank achieved double-digit pretax growth, absorbing net interest income headwinds that, in particular, weighed on our Personal and Corporate Banking business. Our non-core and legacy unit delivered a strong first quarter, although short of the exceptional results of last year's 1Q. On a reported basis, our pretax profit of $2.1 billion included $700 million of revenue adjustments from acquisition-related effects and $1.1 billion of integration expenses. Our effective tax rate in the quarter was 20%. For 2Q, we expect a tax rate of around zero due to a capital-neutral tax credit from further legal entity streamlining in the U.S. and from other planning measures related to the integration. We continue to expect our full-year 2025 effective tax rate to be around 20% with…

We will now begin the question-and-answer session for analysts and investors. [Operator Instructions]. The first question comes from Jeremy Sigee from BNP. Please go ahead.

Good morning. Thanks very much. Firstly, just a basic one. The fact that you're accruing the whole of the 2025 share buyback suggest that you intend to do that almost regardless of what the draft rules look like when they're published in June. Is that a fair interpretation? And then my second question is a bit broader. Could you talk about how your wealth management clients in different regions are reacting in April post the tariffs in the U.S.? Are they doing more with the bank or less with the bank, what are their risk appetite? If you could talk about that, that would be great. Thank you.

Thank you, Jeremy. No it's not a fair representation, considering what I say. That's our language hasn't changed. We said very clearly that we are accruing based on what we know and we see today based on our strong performance, based on our strong capital position. But of course, all of this is subject to us continuing to develop well in terms of financial targets, the integration. And as we pointed out, any material an immediate change in the regulatory regime. So in respect of the activity in April. I can only say that, of course, we had a -- as I mentioned in my remarks, we saw a huge spike in client activity and volatility in the first couple of weeks in the first few days of April, so even achieving a 30% increase compared to the peak of COVID times, which is quite exceptional. But it's fair to say that if you look at the last 10 days or so, there is a fatigue coming in. You see it also in financial margin. I think that markets are stabilizing around current levels across many asset classes. And it's much more of a wait-and-see attitude and so in that sense, it's a more normalized environment.

Thank you.

The next question comes from Giulia Miotto from Morgan Stanley. Please go ahead.

Yes, hi. Good morning. Thank you for taking my question. So the first one, I was surprised to hear that there is re-leveraging in Asia. That's quite a positive development. And I was wondering if that has carried through also in April? Or was it only a Q1 phenomenon and then got the shutdown by the tariff discussion. And then the second question instead, of course, I have to ask on capital. May is the next catalyst there or at least we will learn something there? And is there any development that you can share with us in terms of what to expect, what will go under government ordinance, what would be put to parliament? Yes, any updated thoughts would be helpful. Thank you.

We pick up the second one, and Todd will pick up the first question. There are no developments other than the updated timeline for the announcement of the proposal that are now seen are going to now come in during the first week of June. So we don't know what's the content of this proposal in terms of, also if there is any split between ordinance or legislative process. So we are in a wait and see, and we will see like everybody in five to six weeks' time.

Giulia, I'd say it's helpful to step back and look at the bigger picture here on the lending question. I mean, clearly, for GWM, one of our strategic imperatives is to grow lending, albeit selectively and profitably and as a driver of enhanced relationship revenues for clients. So we're pleased with the developments that we saw in 1Q. I mean, we can't speculate on where things are going to move given the current environment for sure. But we're pleased with the 1Q performance and that still remains a strategic focus for us.

Thank you.

The next question comes from Kian Abouhossein from JPMorgan. Please go ahead.

Yes, thanks for taking my questions. I wanted to come back to U.S. Wealth Management. If you could maybe run, you clearly have done some strategic changes around the U.S. Wealth Management business, both on compensation, but also incentives, et cetera. And if I look on a year-end basis versus now, you have reductions in advisers. I just wanted to see where should we think adviser numbers to go to in U.S. wells? And how should we think around the net new flows, but also impact in that respect because you made some statements in the last quarter there could be a deterioration, but also in terms of improvement in pretax margin. So a bit more of a holistic approach around the changes that you've done and the impact? And then secondly, just coming back to the Federal Council report. Can we just take a step back and just give your current views around your positioning against other banks, but also potential offsets that you can think about in order to offset some kind of additional capital requirement even in big picture terms, if you could talk about that.

Hi, Kian. So on the wealth one, let's zoom out a bit and just reiterate that we're executing at pace on our plans and our strategy. Clearly, quarter-on-quarter, we could see volatility. But this said, we're looking at our ambition to achieve, as you know, a structural midterm -- mid-teen pretax margin, and we look at that as a two to three year journey. On your -- as we zoom in the question on really our platforms and advisers, first, I'd say our platform is stable. There's been broad support for our strategy, which is intended to better align adviser incentives with the strategic goals of the firm, that's evidenced by the very strong same-store net new money. We've seen perhaps the strongest net new money we've seen over many quarters in the first quarter. In terms of the headcount, I would just say that our recruiting pipeline is robust. There is some attrition that one can expect. And in fact, we're observing across the industry given the market dynamics of 2024 versus the beginning of '25 in the outlook that would create some movement across the industry in terms of advisor repositioning, but nothing I would highlight in our own platform.

Kian, before I answer the question, can you specify what you mean by positioning versus other banks?

Yes, Sergio, I left it open on purpose just to see leaving the floor open to some extent, see what you can tell us and your thoughts about it, because it is clearly a very open question. It's a very difficult for us to look soon...

The call is scheduled to end at 10:00 a.m. -- 11:15 a.m. So I'm not -- no, sorry, at 10:30 a.m. So I'm not so sure I have so much time to go through that. So -- but -- so the issue is very clear that when I look at the regulatory framework in Switzerland is one of the most demanding and particularly after we fully implemented Basel III, I think that in terms of relative game, we are comfortable, and so we have a strong and demanding regime that capital and strength is one of our key pillars. Having said that, we all know that there is a point in time in which too much is not necessarily positive. And therefore, that's an only consideration, I can say, when we speak about relative terms. So because at the end of the day, as we always say, we are not only competing in terms of return on capital, but we are also competing for capital. And therefore, having an attractive sustainable business that also delivers appropriate returns is a key element on judging and balancing any regulatory regime. That's what I can say. So in respect of a set of measures, the set of measures can only be decided and analyzed when you know what is the outcome. And so we will need to assess exactly what the proposal is, in terms of impact and timing.

And so just very quickly, do you expect enough clarity to assess with that report?

I hope, I don't expect.

Okay. Thank you.

The next question comes from Stefan Stalmann from Autonomous. Please go ahead.

Yes, good morning. Thank you very much for taking my questions. I have two on capital, please. The first one on the parent bank, the fully loaded CET1 ratio was I think, down by about 60 basis points during the quarter. Was there anything particular to highlight that happened during the quarter? And the second one, a bit more, let's say, strategic, the risk density given the group has actually come down quite a bit now a bit below 31%. And I think the hope was always in a way that Basel IV would kind of lift this risk density towards 35%, where it doesn't matter anymore whether leverage or risk weighted assets drives your capital requirements. But now at 31%, it looks like you're quite deeply constrained by leverage, not risk-weighted assets going forward. Do you expect this to change at all from what you can see? And if not does it have any impact on the way that you run your capital management going forward?

Thanks, Stefan, for those questions. Appreciate you bringing those up. So on -- first, on the capital, the parent bank quarter-on-quarter reduction, as I mentioned in my comments, comes from the accrual of a dividend that we expect to pay in '26 in relation to 2025 overall earnings of the parent bank. So it's a dividend accrual that effectively drove the capital ratio within our guidance. On the second one, it's a very good spot on your point about risk density coming in. I would say you're also right, we're, I would say, more constrained by leverage than risk weighting. But remember that we set our CET1 capital ratio on a risk-weighted basis as our key target. So in that sense, that becomes for us, binding unless truly leverage becomes binding. But to answer your question about what you can do about it or what the cause was or is, I would say that you see how we've been able to really drive down RWA because of the technical nature of it and the way we've been able to manage down work -- also work to get approvals on models, on methodology, on data quality, on all the issues, coverage of external ratings, all the things that have helped us drive down. I think the leverage ratio, unfortunately is just more simple, less fertile ground for optimization. And so you saw as I commented that we had the SACCR increase whereas on RWA, we had a more fertile ground to optimize. So I think your observation is correct. But I don't see at this time given we intend to operate with a CET1 capital ratio of around 14%, which for us is binding even though you're right, leverage is we have less cushion on the leverage side than we do on the risk-weighted side going -- nothing is changing as we move forward. That's the way we're thinking about it.

The next question comes from Benjamin Goy from Deutsche Bank. Please go ahead.

Two questions, please from my side. The first one on your India partnership. Maybe you can a bit more broader on the onshore offshore dynamics we should expect in emerging markets going forward in a large market like India, you have to do a partnership? And then secondly, markets are now pricing and again negative rates in Switzerland. Just wondering short term, any impacts or below 0, there's as not much of an incremental negative impact, the longer-term question is the 50% cost-to-income ratio target in the U.S. Swiss business was, I assume or based on policies rate outlook, how do you intend to achieve that more on the cost side? Thank you.

Great, hi, Benjamin. Let me address the second question. So on your observation regarding the market pricing and negative rates, as we indicate in our interest rate sensitivity and as I've commented before, we certainly see convexity in the movement of rates either down or up in the sense that whether rates move in negative territory or move up, that would be accretive to our net interest income in our P&C business. So in that sense, to the extent that is priced in and to the extent that actually happens, we see upside in our NII. You asked about the expectation on the cost/income ratio targets that we have by the end of 2026. I would say it's -- we're -- we continue to execute against that expectation. That is our expectation at this stage, not changing that given interest rate expectations at this point in time.

So on India, I think that we see a secular trend developing for the Indian market domestically and -- but also at the same time, we see also an opportunity for India residents booking business outside. And looking at our current setup, we had -- and we decided that the best way to pursue the next phase of growth and growth opportunities in India for us was to partner with the only fully independent asset gatherer in India. And so through that -- through the combination of us buying a stake but also bringing our current business into 360, we can now leverage for the future. So we see very good prospects across the board in terms of not only sharing our best practice globally, but also learning on the domestic markets, and we'll take it from there. So I think that we are very optimistic about the long-term potential growth in India.

Thank you.

The next question comes from Goel Amit from Mediobanca. Please go ahead.

Hi, thank you. And then maybe just more of a follow-up question, but just the remarks earlier about the equity double leverage and kind of looking to get down to 110% at Q2? And then continue to bring it back to pre-acquisition levels in the quarters after. I'm still kind of curious why -- what drives the pace of that? And kind of what's the cost or what's the consequence if you were to stay at 110% because let's say, if the group were to have less leverage at the parent bank level. What would stop the group having a bit more leverage at the group? And what would be the consequence or what is the benefit of bringing that down from 110% to, say, 105% or 100%. And so that's the question there. And then just on the PCB business. Again, I appreciate the response on different rates, for example, if they were to go negative, et cetera, the convexity. Just wondering what you're thinking about volumes there given the exchange rate movement? Any color would be helpful. Thank you.

Thanks, Amit. So on the first your question in terms of the consequence of a higher one or the benefit of a low one. For sure, the way we look at it is a lower one, which is to say, our pre-acquisition levels, the way we've historically operated. One is more prudent. It's in line with our strategy and third, it just offers far more flexibility. So if you operate at a higher level and then you hit any stress, then your -- you've effectively sold your buffer. And so that's the reason why it's prudent to operate the levels that Sergio and I have been highlighting over the last quarter or two since I raised the topic last quarter. In terms of P&C volumes, as we look forward, I would say at this point, the outlook on lending is flattish for now in terms of volumes in ways that if that is a mitigant for sure, the balance sheet optimization that they've done that the business has done on the asset side has driven profitability, return on attributed equity, revenue over RWA accretion -- appreciation. So I would say that's the main focus on the lending side. Deposit outlook is also relatively flattish, maybe some short-term moderate down a bit in a very competitive market and we're not chasing where we're seeing competitors buying deposits at much higher rates to protect their loan books. So our deposit outlook is stable, I would say. But again there, we have adjusted deposit pricing on select products to help. But at the end of the day, as I've said before, certainly the biggest help would be rates either moving down or up from a sort of a 0 perimeter as that would really be the most accretive from an NII perspective in the P&C business.

Thank you.

The next question comes from Andrew Coombs from Citi. Please go ahead.

All right. Good morning. I have two follow-ups, please, one on capital and one on GWM NII. On capital coming your way back to Jeremy's first question. You've taken a change in approach, you've fully accrued of the buyback rather than taking the capital impact as and when you execute. Can I just ask what was the rationale for doing this? And is this something you envisage doing going forward as well? Second question on GWM NII. And I think at the full year results, you talked about Q1 being down low to mid-single digits sequentially, you've ended up down 7%. And you said that there was 1 percentage point of that was due to the resegmentation. But nonetheless, it look a little bit worse in your original guidance. So perhaps you could explain why it came in slightly worse than you initially expected? And then more broadly, your full year guidance for GWM NII is unchanged, that was previously predicated on the second half being flattish versus the first half. Are you now assuming a slight recovery in the second half?

So thank you, Andrew. So on capital, again, I think that -- the main driver here is to also manage our ratio in respect of our guidance and by doing the accruals we basically take it closer to our -- around 14%. But most importantly, I think that the real factor that has changed is that we move from having an ambition to having an intention to. I mean this is all still subject to the conditions we always said in terms of financial performance and also no material and immediate change in the regulatory framework. But it's clear that now we have -- because of the results and the progress we are making in the integration and everything that we can control, we feel comfortable that this is the way to go. So you can always expect that as soon as we feel that there is a change between ambition and intention also from an accounting and standpoint of view, we will accrue in a prudent manner, which we believe is also more prudent that kind of reserve that's in order to then execute on capital return plans. And Andrew, on the second question, yes, the reason I gave some color on the segmentation change is just to explain a bit of the delta. But with that explain you kind of get into the mid-single-digit range, which is where we guided into 1Q sequentially from 4Q. In terms of the outlook going forward, you're right. I mean I'm reaffirming the full year NII guidance for GWM, I see the loan outlook to be again, dependent on the rate environment, but the loan outlook to be positive also dependent on the macroeconomic environment, but that right now until we see any drastic change loan outlook has been accretive on the NII in terms of the rest of the year for GWM. And also the deposit outlook is helping as well, again, subject to macroeconomic developments, but we also see some of the preferential FTD headwinds tapering. And so ultimately, this is contributing as well to deposit margins increasing. So for those reasons, I've kept the guidance stable for the full year. And as I said, offered the explain to sort of move into the Q1 guidance range.

Great, thank you.

The next question comes from Chris Hallam from Goldman Sachs. Please go ahead.

Yes, good morning everybody. Thank you for taking my questions. You mentioned in the prepared remarks the LCM pool shifted towards corporates and away from sponsors. Any insights you can share on your discussions with the sponsor community more broadly how you expect them to act in the coming quarters based on the operating backdrop we see today? And maybe at what point would you consider reassessing the banking revenue ambition for 2026, I guess, in light of the slower activity levels year-to-date? And then second, I just want to come back on this risk of an immediate and material change to the regulatory regime. So I appreciate the process is maybe less clear than it was. The range of outcomes has probably widened. But for risk of immediacy also increased, it feels as though if anything, stuff been pushed right a little bit. And obviously, there hopefully would be still some kind of fade in period, we would assume. So just any thoughts on that? Thank you.

Well, look, I think that generally speaking, it's on a year-on-year basis, the drop in the sponsor-related activity was more important. But I would say that in general, sponsors are also like everybody on a wait-and-see attitude. A lot of transactions are on hold. They are not necessarily being canceled. Of course, if you look at to some extent, the new levels of funding and spreads and credit markets may put some transaction at in question. But generally speaking, the sense is that people are waiting to see if the situation clarifies in the next couple of months and then they're going to go into executing on plans for either add-on acquisitions or disposals, IPOs. So I think that the most important issue that we see right now is that the pipeline of potential transaction is still healthy and building up. So we don't see a stop on that. So coming to your question, I think that's when we would change our outlook for over the cycle and ambitions on the top line is going to be when -- if we have a material change in the market conditions and in the prospect for the growth of banking businesses in the industry. Our intention to be a relative winner out of it by gaining share of wallet remains unchanged. So if we have to change our revenue assumptions, we're definitely not going to change our market share ambitions to improve and monetize on the investments we did on the platform in the last 24 months. In respect of the second one, I mean, look, it's just a -- we are not in control of this process. We don't know what's coming out. And so we can't rule out anything in terms of the materiality of the change and the timing. Therefore, it's -- you have to interpret this language more as a prudent way to highlight that we are -- that's a possibility. That doesn't necessarily reflect what we expect or don't expect.

Okay, thanks Sergio.

The next question comes from Piers Brown from HSBC. Please go ahead.

Yes, good morning. I've got two. One on FRC, so up 27% year-on-year. It's a much stronger print than a lot of your peers. And I'm just wondering, is that business mix related? You've mentioned the strength of FX or do you feel that you're still winning back market share in that business? And then the second question, sorry to come back on capital again, but you did say in the fourth quarter that you have further subsidiary repatriations potentially in the pipeline. I think you mentioned $5 billion from CSI and maybe something more coming out of the IHC. Can you give an update on progress on both of those fronts? Thanks.

Hey Piers, so on the first question, the pickup in FRC year-on-year was driven by FX, where we're strong concentrated. We had -- it was a difficult quarter, I think for those that are more in rates and credit. And where, as you know under concentrated there, so we didn't have that impact. So we benefited from where we were well indexed in the FRC segment. From -- on the capital question in terms of an update, yes, you recall correctly that there remains additional capital to be repatriated out of some of the foreign subs, in particular, the U.K. one and a bit more as well in the U.S. We're going through the normal process with the regulators to approve the release of the capital, which is to say that we continue to work down the portfolios, largely noncore and legacy portfolios in those entities. And as we continue to make progress and that capital is indeed excess, including from the supervisory standpoint under their conservative lens, they'll give us the -- still signal the okay, and then we'll repatriate that over the course of the next several quarters.

Sounds great, thank you.

All right. Thank you. So there are no more questions. So thank you for calling in and for your questions and the IR team is at your disposal for any follow-ups. So have a nice day. Thank you.

Ladies and gentlemen, the webcast and Q&A session for analysts and investors is over. You may disconnect your lines. We will now take a short break and continue with a media Q&A session at 10:45 CEST. Thank you.