(Bloomberg) -- UBS Group AG may pass on the impact of negative rates to very wealthy clients and raise the rates it charges for credit, Chief Executive Officer Sergio Ermotti said on Tuesday.

The bank will consider the measures if “conditions remain as they are or grow worse,” Ermotti told shareholders at the annual general meeting in Basel. “Or we will have to demand payment for services that were previously free - with the possibility that additional fee adjustments in the future will also be necessary.”

European banks are feeling the squeeze from record-low interest rates eroding profit margins at a time when market volatility and declining energy costs are prompting investors to pull funds. UBS earlier this month reported a first-quarter profit drop of 64 percent, partly hurt by the “lowest transaction volumes” ever recorded in that period at the wealth management unit.

The Swiss National Bank has held its deposit rate at minus 0.75 percent for more than year to help weaken the Swiss franc. While UBS and other banks in Switzerland have passed on the cost of negative franc rates to institutional and corporate clients, most have held back from charging private banking and retail banking customers, encouraging them instead to diversify their investments away from pure cash holdings.

--With assistance from Catherine Bosley To contact the reporter on this story: Giles Broom in Geneva at To contact the editors responsible for this story: Neil Callanan at, Simone Meier

©2016 Bloomberg L.P.