UBS Group AG

The stable outlook reflects our view of UBS' strong resilience amid the pandemic because of its wealth management-focused business model and credit portfolio dominated by collateralized lending. We could lower the ratings over the next two years if there is a material setback in the economy recovery that would significantly weaken UBS' asset quality and earnings. We may consider a downgrade if we revised downward our Banking Industry Country Risk Assessment for Switzerland. In that scenario, we would consider the extent to which the bank's intrinsic strengths may mitigate the adverse economic conditions in comparison with peers. We could also lower the ratings if the outstanding litigation cases result in significant charges in excess of provisions. A one-notch downward revision

...S&P Global Ratings expect UBS' diversification and asset-gathering focus to remain the differentiating factors that underpin the stability of its earnings and balance sheet against similarly rated peers. UBS' revenue pool is dominated by stable contributions from its leading wealth and asset management divisions that generate favorable risk-adjusted returns. In addition, UBS' leading market position in the Swiss domestic banking market has contributed to its superior business stability amid the pandemic. We think UBS' credit losses will remain contained but slightly above the historical average due to the pandemic. UBS' asset quality benefits from its focus on collateralized mortgages and Lombard loans that dominate its lending portfolio, and has only limited exposure to higher-risk areas, including leverage finance and unsecured lending. Future credit losses will mainly depend on the path of the economic recovery, but we expect the group's balance sheet to demonstrate ongoing strong resilience....

Full Report