Microsoft Q3 Earnings beat Expectations

Investors are keen to see progress on cloud growth, AI and capex trends. Analysts predicted 10% rise in earnings per share from last year to $3.22 with Azure and AI related segments forecast to drive growth. Actual numbers came out at $3.46 per share exceeding analyst expectations. Cloud and AI drove the growth, as Microsoft reported $70.1bn in revenue for the quarter ending in March, a rise of 13% from last year's number. Net income came in at $25.8bn (a rise of 18%). Azure revenues rose 33% from last year.

UBS shows strong profits and franchise strength in Q1 2025 with robust CET1

UBS has reported (30 April 2025) 2.1bn USD PBT (profit before tax) for Q1 2025 and a net profit of 1.7bn USD with RoCET1 of 9.6%.

Measures of franchise momentum have also been positive: this includes USD 32bn of net new assets into Global Wealth Management and USD 7bn of net new money into Asset Management.

UBS also calculates an underlying PBT and underlying RoCET1 which excludes P&L items which management consider not representative of underlying performance.  This gives a higher PBT number and higher RoCET1.

Capital position is strong with CET1 ratio of 14.3% and CET1 leverage ratio of 4.4% (banks have a requirement to keep their CET1 ratios above 4.5% to meet Basel standards with additional plus points if over 14%). UBS has stated this provides "a solid capital buffer to requirements during integration" (referring to Credit Suisse integration) and "given increased market volatility" (driven by US tariff policy changes).

The CET1 ratio is used to gauge a bank's solvency and capital strength.  

CET1 stands for Common Equity Tier 1 and measures the bank's "core capital" including common shares and retained earnings.  The BIS describes CET1 as the "highest quality of regulatory capital, as it absorbs losses immediately when they occur".

Tier 1 capital consists of CET1 and Additional Tier 1 (AT1) capital. Contingent convertibles (which can be converted into equity) and other kinds of hybrid securities qualify as AT1 capital. Typically these convertibles will have "triggers" to convert into common equity or be written off if CET1 ratios fall below a certain level.

Tier 2 capital consists of instruments other than common equity and is less discussed.

Growth including GenAI and cloud investments have included the roll-out of 50,000 Copilot licenses to employees (UBS has over 110,000 employees so this is under half of employees, including contractors), increased cloud usage to ~75% and an exclusive JV with 360 ONE on wealth management in India and international markets.

There are a few areas not covered by the broad results announcement - how well has Trading done, and how reliant is UBS on trading now relative to wealth and asset management.

FinTech Megadeal for April 2025

FIS has announced it will purchase Global Payments' (GPN) issuer solutions business for $12bn, with GPN intending to buy WorldPay for $22.7bn 

(Note: WorldPay is 45% owned by FIS and 55% owned by Chicago private equity firm GTCR).

GPN is essentially divesting (issuer solutions) and investing (WorldPay), with a net investment of $10.7bn. 

GPN is run by Cameron Bready, who moved up from the CFO role, and was formerly of ITC Holdings Corp, electricity transmission company (publicly traded), where he focused on Finance and corporate development and prior to that was at Northeast utilities. He studied business in Atlanta. What remains in Global Payments following the divestment should be clearly understood - of course WorldPay will be a new integration.

Lots of analyst commentary has bubbled up around this deal with Mizuho commenting FIS is "winning the trade" as it acquires a "stable grower". Less commentary has surrounded GPN (GPN-WorldPay) specifically.

The United Nations Technology and Innovation Report 2025

UN Trade and Development (UNCTAD, for United Nations Conference on Trade and Development), headed by Rebeca Grynspan of Costa Rica, will soon release its 2025 Technology and Innovation report, which amongst other findings, outlines countries' readiness for "frontier technologies" (includes AI, big data, quantum technology). Its theme will be "Inclusive Artificial Intelligence for Development". The term "frontier technologies" is used by other organizations as well such as WIPO (World Intellectual Property Organization).