UBS bankers did well but there are still $4bn+ of costs to cut
UBS’ results for Q1 2025 were published today. Employees of its investment bank should be pretty happy, with total revenues up and profit up even higher, but the mood is more likely a mix of jubilation and solemnity. There are still plenty of costs to come out.
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UBS has cut $8.4bn of the $13bn it plans to in costs so far, but it's a looming milestone, and it intends to cut another $1.6bn by the end of this year. It's already spent $10bn on integrating Credit Suisse; it expects to spend an additional $2.5bn in 2025, out of a planned $14bn in total.
Overall investment banking revenue grew by 24% between Q1 of 2024 and Q1 of 2025, in part matched by a 14% increase in "personnel expenses". The increase in revenue, however, was not universally distributed, and two groups in particular shone at the bank across the quarter.
The first was its traders. Fixed income, currencies, and commodities (FICC) revenues at the bank were up 27% in Q1 of 2025 compared to Q1 of 2024, well ahead of its American rivals as well as Deutsche Bank, the latter of which reported a record 17% growth yesterday. FICC performance at the bank was driven by foreign exchange traders.
Equities traders also did at UBS well, with 33% revenue growth, albeit below the +45% highs of JPMorgan or Morgan Stanley. The bank credited both its cash and derivatives teams for equities revenue growth, as well as its prime brokerage desk.
Banking revenues were more mixed. Advisory revenue (mostly comprising M&A) grew by 17%, with the bank crediting its people in APAC for the increase.
UBS's performance in capital markets was harder to parse, as the firm does not break out figures for debt and equity capital markets like others do, but it did note that the overall 13% drop was driven by revenue in leveraged capital markets.
UBS's inherited Credit Suisse's strong leveraged finance business, and last year the bank finally began reshuffling the top of the unit to make room for its excellence. Former CS LevFin head Marc Warm was promoted to lead the team last August, kicking a UBS veteran out of the way in the process.
UBS discarded another $7bn in former Credit Suisse assets in Q1 of 2025, bringing its total discard pile down to $34bn from an initial $86bn digestive track. The bank aims to get that below $28bn by the end of 2025; it might achieve it by the end of Q2 instead, at this rate.
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