UBS Group AG Outlook Upgrades to Positive by Fitch, Affirms IDR at 'A'

Fitch Ratings has revised the outlook of UBS Group AG UBS, UBS AG's and UBS Switzerland AG to Positive from Stable.  UBS's long-term Issuer Default Rating (IDR) has been affirmed at 'A,' while UBS AG's and UBS Switzerland AG's have been affirmed at 'A+.’ This upgrade reflects Fitch’s expectation that UBS’s well-advanced integration of Credit Suisse ("CS") will continue to reduce execution risks while improving profitability.Rationale Behind UBS’s Rating UpgradeExecution Risk Declining: Fitch expects UBS’s execution risk to decline steadily as Credit Suisse integration progresses, with minimal residual risk expected after client migration and system decommissioning. The integration, expected to be completed by end-2026, has progressed efficiently, reinforcing UBS’s clear strategic direction, operational resilience, and financial strength. Positive Outlook also considers the expectation of a significant and durable improvement in profitability from 2026.UBS has effectively controlled integration risks over the past two years, preventing operational disruptions and preserving its prudent risk culture. The wind-down of non-core and legacy assets inherited from CS is ahead of schedule, further demonstrating the effectiveness of the transition.Stronger UBS Post CS Integration: The Positive Outlook indicates Fitch's confidence that the integration of Credit Suisse will enhance UBS’s business model by increasing scale and diversifying revenue. This supports UBS’s well-executed strategy and its strong leadership in global wealth management. Additionally, UBS benefits from a top-tier Swiss retail and corporate bank, as well as an investment bank with a moderate size and risk profile, focused on complementing its wealth management operations.Profitability Set for Strong Growth: Fitch expects UBS’s profitability to recover to pre-acquisition levels within the next few years, once integration costs recede in 2026. Specifically, UBS’s operating profit/risk-weighted assets ratio, which was 0.2% in 2023, rebounded to 1.4% in 2024 and 1.5% in 2025. Fitch projects further growth to 2.5% in 2026 and 3% in 2027, maintaining close to this level thereafter.Liquidity Strength and Resilient Capital Position: UBS’s capital position remains strong, with Fitch expecting a buffer over its medium-term CET1 ratio guidance of 14% until integration is completed. UBS maintains one of the highest Basel leverage ratios among European banks, reinforcing its financial stability. Additionally, its liquidity coverage ratio (LCR) stood at 181% in the first quarter of 2025, highlighting a stable funding profile.Risk Management and Stabilized Funding: Fitch expects UBS to continue managing integration risk effectively, ensuring stable operations and mitigating disruptions. UBS has steadily improved its loans-to-deposits ratio to 83% in the first quarter of 2025, approaching pre-acquisition levels. The bank’s effective control over integration risk has prevented operational disruptions, ensuring a smooth transition of CS’s Swiss clients onto UBS systems. Fitch acknowledges UBS’s prudent risk culture, reflected in its low impaired loans ratio of close to 1%, which is significantly better than that of its European peers.Parting Thoughts on UBSThe Positive Outlook reflects Fitch’s expectation that UBS will restore profitability to reach pre-acquisition levels while maintaining strong asset quality, solid capital, and resilient funding. UBS’s successful integration of Credit Suisse is expected to durably strengthen its business model, reinforcing its leading position in global wealth management. The bank’s Swiss retail and corporate banking operations, alongside a moderate-risk investment banking unit, support this strategic expansion.Over the past six months, shares of UBS have risen 0.2% compared with the industry’s growth of 22.4%.Image Source: Zacks Investment ResearchCurrently, UBS carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.Rating Action on Other BanksIn March 2025, Hercules Capital, Inc. HTGC announced that Morningstar DBRS has upgraded its investment grade credit and corporate ratings to BBB (high) from BBB. Further, the trend revision has been revised from Positive to Stable.The upgraded ratings with a stable outlook indicate HTGC’s sustained solid operating performance in 2024 and a roughly 14% rise in assets under management on a year-over-year basis.Likewise, in November 2024, JPMorgan JPM received an issuer credit rating upgrade from S&P Global Ratings in a significant endorsement of its operational prowess and market leadership. The company’s long- and short-term ratings have been elevated to A and A-1 from A- and A-2, respectively. Accompanied by a stable long-term outlook, this upgrade reflects JPMorgan’s strong fundamentals, adaptability across economic cycles, and strategic leadership. As S&P Global noted, JPM’s ratings are now among the highest for banks globally.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.0% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report JPMorgan Chase & Co. (JPM): Free Stock Analysis Report UBS Group AG (UBS): Free Stock Analysis Report Hercules Capital, Inc. (HTGC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks