The year that should have hailed transition at Credit Suisse, looks like it is turning into more of the same as results were worse than expected in the first quarter.
Switzerland’s troubled bank delivered more bad news on Wednesday, announcing a pre-tax loss of 428 million Swiss francs ($446 million) for the first three months of the year. That comes on top of a 1.7 billion francs loss in the fourth quarter, while the bank's first-quarter losses of 2021 were 757 million francs.
The loss attributable to shareholders was 273 million francs, slightly worse than the 252 million francs loss in the first quarter of 2021.
Besides challenging market conditions, geopolitical tensions, inflationary pressures, and changes in interest rate expectations, previously reported litigation expenses of 703 million francs led to the net loss, as finews.com reported.
Net revenues decreased by 42 percent compared to the first three months of last year, driven by a widespread decline in the investment bank, down 51 percent, wealth management, down 44 percent, and asset management, which fell by 10 percent.
Russian Impact
Russia's invasion of Ukraine «negatively impacted» the bank's results, causing a 206 million franc loss, the bank said, adding that it had cut its Russian net credit exposure by 56 percent to 373 million francs since the end of 2021.
The net asset value of Credit Suisse’s Russian subsidiaries is 200 million francs, down 16 million francs compared to the final quarter of last year.
New Money
The bank attracted net new assets of 7.9 billion francs in the first quarter, an improvement over the fourth quarter’s 1.6 billion francs, but still lagging behind the 28.4 billion francs which came in at the beginning of last year.
Total assets under management fell to 1.555 trillion francs from 1.614 trillion in the previous quarter, and down 4 percent from the first quarter of last year.
Supply Chain Finance
As of the end of the quarter, Credit Suisse reported that discussions with GFG Alliance and Bluestone on refinancing and restructuring other assets continue. In addition, it filed 14 insurance claims through the filing process with Greensill banks, with a total underlying exposure of around $2 billion.
More Litigation Provisions?
The litigation provisions of 703 million francs relate to legal matters affecting the corporate center and wealth management units of the bank. Still, Credit Suisse estimates the range of «reasonable possible losses» could reach an additional 1.4 billion francs, which has not been accounted for in the current litigation provisions, it said. As finews.com reported, the Swiss bank warned its current ones may not be enough for some of the cases it is still facing.
Thomas Gottstein, Credit Suisse CEO, reiterated that 2022 is a transition year for the bank saying «Our clear focus remains on the disciplined execution of our new group strategy as announced in November 2021: strengthening our core, simplifying our organization, and investing for growth.»
More to follow
