Credit Suisse's Swiss business was the anchor keeping the overall Group steady in the storms of recent months. But the anchor has been dragging in the unit that has seen strong funds outflows.

The future of Credit Suisse under the UBS umbrella is still vague. In the public and politics, speculation is mounting as to what will become of its Swiss business. Will the brand disappear from Switzerland, or will the bank remain a subsidiary? Will it be spun off as an independent entity, possibly even as a listed company? These are just some of the questions being currently discussed.

Retail Outflows

The first quarter results published on Monday show the turbulence surrounding the emergency bailout has also left its mark on the Swiss Bank unit which recorded an outflow of 6.9 billion francs of client assets mainly in the private client business.

Although assets under management grew slightly by 0.2 percent to 526.6 billion francs at the end of March from the end of last year, it's a weak figure in light of improving market conditions. Compared with the previous year, it was a decline of 9.6 percent.

Super-Rich Swiss Go Elsewhere

The outflows of around one percent at Swiss Bank are comparatively low compared with the wealth- and asset-management units that saw respective declines of nine and three percent. However, the figure is less meaningful because of an institutional quirk. At Credit Suisse, wealthy Swiss clients are booked to wealth management, not to the Swiss Bank division.

In terms of net income, Credit Suisse's Swiss Bank posted a decline of 15 percent year-on-year to 973 million francs, with pre-tax profits falling 40 percent to 287 million francs. Adjusted for real estate valuations and other factors, the figure was 313 million francs, a 20 percent drop.

Lower Customer Activity

Net interest income declined 11 percent year-on-year, and commission and fee income by eight percent. The higher income from customer deposits was offset by lower income from loans, as well as by the lack of benefits from the allowance at the central bank, which Credit Suisse enjoyed in the negative interest rate era.

Credit Suisse also pointed to reduced client activity and lower revenues from its Swiss investment banking business, which it said caused transaction-based revenues to shrink by 12 percent.

Adjusted operating expenses fell 3 percent from the first quarter of 2022. The bank cited lower expenses for «discretionary compensation,» or bonuses, as well as lower group-wide operating costs. Credit Suisse continued the restructuring it began last fall following the announcement of its acquisition by UBS. The bank did not provide precise details on staff development overall or about the Swiss unit when asked by finews.com.

Answers are Needed

Now all eyes are on the UBS media conference on Tuesday. Whether new CEO Sergio Ermotti will be able to present a more detailed plan on the direction and timing of the takeover here remains to be seen. Credit Suisse employees, at the very least, will be hoping for some clarity soon.