Credit
Suisse has announced its Q1 2023 financial results, highlighting a pre-tax
income of CHF 12.8 billion ($14.1 billion) and a CET1 capital ratio of 20.3%.
The quarter was marked by growing challenges, primarily stemming from the
planned merger with UBS Group AG, which was revealed in March.Credit Suisse Sees Significant
Asset OutflowsThe bank’s
performance during the quarter was significantly impacted by a CHF 15 billion
write-down in Additional Tier 1 (AT1) capital notes, ordered by the Swiss
Financial Market Supervisory Authority (FINMA) in light of the impending
merger. Nonetheless,
the adjusted results reveal that the company’s net revenue reached CHF 2.8
billion, representing a decline of 40% compared to the same period in 2022.
Additionally, the final adjusted pre-tax loss amounted to CHF 1.3 billion,
witnessing an increase of CHF 300 million compared to Q4 2022.Credit
Suisse’s problems resulted in substantial asset and deposit outflows, with
impacted assets under management (AuM) of CHF 1.3 billion. Deposit outflows
represented 57% of the quarter’s Wealth Management and Swiss Bank net asset
outflows. It means that during the three-month period ending in March, it
experienced a net outflow of assets worth more than CHF 61 billion.The
strongest outflow of assets was observed in Wealth Management, amounting to 9%
of the AuM reported in the previous quarter. Adjusted revenues for the division
decreased by 33% year-over-year, and its adjusted pre-tax loss was CHF 115
million.Credit Suisse Cuts
Employment and Abandons Acquisition of the Klein GroupDespite the
turbulence surrounding the merger, “Credit Suisse is taking proactive
measures to protect its client franchise, manage risks and facilitate
operational stability,” the company commented in the quarterly report. The
bank is making headway on cost transformation programs and risk reduction
initiatives following a review of its financial plans.In the
Special Purpose Group (SPG), the bank has successfully reduced asset equivalent
exposures by approximately USD 48 billion since Q3 2022, amounting to more than
85% of the targeted reduction of USD 55 billion. This significant reduction has
positively impacted SPG and its related financing businesses.Additionally, the
Non-Core Unit (NCU) has seen substantial reductions in Risk Weighted
Assets (RWA) and leverage exposure, with a decrease of approximately USD 4
billion and USD 14 billion, respectively, since Q4 2022. These reductions
demonstrate Credit Suisse’s commitment to optimizing its balance sheet and
minimizing risk.In terms of
cost actions, the bank has made notable progress on its cost transformation
program, with adjusted operating expenses in Q1 2023 dropping by 6%
year-over-year. This decrease is attributed to lower general and administrative
expenses and a reduction in compensation and benefits. Furthermore, Credit
Suisse has achieved a reduction of 9% in its workforce since Q3 2022, contributing to
its cost-saving efforts.Credit
Suisse announced job cuts as early as January and continued with them in March.
The process accelerated this month when news of the UBS takeover emerged. The
bank has decided that a total of 36,000 jobs will need to be cut across both
units.Lastly, in
light of the recently announced merger with UBS Group AG, Credit Suisse Group
AG and M. Klein & Co LLC have mutually agreed to terminate the acquisition
of The Klein Group, LLC (the investment banking business of M. Klein & Co.
LLC). The decision to acquire Klein was announced in February when Credit
Suisse reported CHF 7.3 billion annual loss.CySEC flags 8 FX platforms; Equiti’s Sales VP departs; read today’s new nuggets.
This article was written by Damian Chmiel at www.financemagnates.com.
