UBS Switzerland Feels the Pinch as Interest Income Slides

UBS Switzerland Feels the Pinch as Interest Income Slides

UBS’s Swiss unit saw earnings slide in the second quarter as interest margins narrowed and credit losses rose. The domestic banking giant is leaning on cost cuts to steady the ship.

UBS’s Personal & Corporate Banking (P&C) division – which anchors its Swiss operations – reported a pre-tax profit of 566 million francs and an underlying pre-tax profit of 557 million francs in Q2 2025. That represents a drop in profitability as revenues fell 8 percent year-on-year, largely due to lower net interest income.

Despite top-line pressure, UBS Switzerland held firm on expenses. Operating costs declined 2 percent to 1.24 billion francs, supported by lower personnel expenses and ongoing integration-related savings. Excluding temporary charges, underlying costs were down 5%, helping maintain a cost/income ratio of 61.8 percent.

Credit Losses Tick Up

UBS recorded net credit loss expenses of 91 million francs in the second quarter, up from the same period last year. The increase was driven by higher costs on impaired positions, partially offset by effective risk management.

Overall credit quality remains sound but is being closely monitored.

Integration Effects Still Weigh

The Swiss unit continues to absorb the aftershocks of the Credit Suisse acquisition. Q2 included 222 million francs in integration and PPA-related charges, reflecting both system and structural streamlining.

Excluding these, underlying performance was notably more stable.

Core Swiss Business Holds Steady

UBS’s P&C division encompasses retail banking, mortgages, SME lending, and payment services – the heart of its Swiss business. While margin compression continues to be a headwind, the bank remains committed to digitalisation and operational efficiency as levers for future growth.

UBS reaffirmed its commitment to Switzerland as a core market. Despite softer revenues, the bank is focused on driving growth in digital banking, supporting local businesses, and improving cost efficiency across its Swiss franchise.