# the default umask is set in /etc/profile; for setting the umask
# for ssh logins, install and configure the libpam-umask package.
That's literally what your
~/.profile says. Did you relogin once changed? It should work fine.
This file is not read by bash(1), if ~/.bash_profile or ~/.bash_login exists.
Actually confirmed the issue on a freshly installed ubuntu 17.04. Even fully updating still causes this issue to arise and even
~/.bash_profileis ignored, there seems to be an issue with the command interpreter not reading those files after login.
You can use
~/.bashrc for now, which still works fine and is read during login.
So after digging a little into it, it seems bash is not run by default with the --login anymore which means it doesn't read the ~/.profile. Starting a new bash with the umask in ~/.profile with
bash --login sets the umask correctly starting a bash without it though ignores the ~/.profile. Not sure what was changed but this seems like a bug to me unless it was intentionally changed.