UBS Gains a Bull as BofA Analyst Sees Top EPS Growth Among Banks

(Bloomberg) — UBS Group AG is set to grow earnings per share at the fastest sequential pace of any bank globally, according to analysts at Bank of America Corp.

The team led by Antonio Reale estimate the Swiss lender could deliver roughly 30% EPS growth between 2025 and 2028, they wrote in a note, upgrading the shares to buy from neutral and lifting their price target to the highest among analysts tracked by Bloomberg.

The stock is now a top pick at BofA, with the upgrade also reflecting Swiss proposals for more lenient capital requirements they say could cut the impact by nearly 60%.

“UBS is a highly attractive proposition, and the equity story combines the potential for more lenient capital requirements with areas of strong growth in wealth management and capital markets,” Reale noted.

The stock rose as much as 3% on Tuesday, following last week’s surge to a 17-year high after Swiss legislators proposed allowing UBS to use a kind of junior debt known as AT1 bonds instead of equity as capital backing for its foreign units. The Swiss government’s proposal currently says it can only use equity capital, which can absorb losses more readily.

Reale wrote that “a compromise on capital requirements is likely on the way.” It could potentially lower the need for additional CET1 capital to around $10.8 billion, he said, compared to the current government proposal that threatened to impose as much as $26 billion in demands.

UBS is currently a big outlier on regulatory rules and the proposal marks a significant change, he said, lifting his price target to 48 Swiss francs, implying about 41% upside from Monday’s close. Reale also cited the lender’s strength in terms of wealth management in Asia and capital market activity in the region, as well as its cost-reduction efforts.

–With assistance from Joe Easton and Steven Arons.

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