Credit Suisse released Q1 results on Monday. They weren’t great.
I suppose you could say this is irrelevant. After all, the final “result” of the bank’s first quarter operations was a shotgun wedding with UBS, orchestrated by the Swiss government.
Still, the figures are worth a mention. If nothing else, they underscore the integration challenges for UBS, and also give you a sense of the outflow pressure Credit Suisse faced following an errant remark from Ammar Al Khudairy, whose ill-fated March 15 interview with Bloomberg Television cost him a job and nearly triggered a global financial panic. (Bloomberg’s anchor could’ve, and in my opinion should’ve, chosen his words more carefully while questioning Al Khudairy.)
“In Q1 2023 Credit Suisse experienced significant withdrawals of cash deposits, non-renewal of maturing time deposits and net asset outflows across Wealth Management, Swiss Bank and Asset Management,” the bank said Monday. Specifically, customer deposits dropped by CHF67 billion during the first quarter. Although the outflows “stabilized” at lower levels following the UBS merger, Credit Suisse said they “had not yet reversed.”
From Q2 of 2022 through Q1 of this year, Credit Suisse suffered CHF232.66 billion in deposit flight, with CHF205.3 billion of that coming over the last two quarters.
In Wealth Management, revenues dropped 33% YoY in Q1 (and 18% from Q4), on lower NII, lower fees and… well, just lower everything. Swiss Bank revenues dropped 15% amid deterioration “across all major revenue categories.” Asset Management revenues dropped 45%. The pre-tax loss in IB was CHF448 million. That made CHF1.22 billion over the past two quarters, if you’re keeping track at home. UBS probably isn’t enamored with the 63% plunge in advisory fees to just CHF77 million(!).
Firmwide revenues rose 320% YoY, and net income was a record CHF12.432 billion, but don’t get too excited. That just reflects the CoCo writedown. Without that, the bank notched a CHF1.3 billion loss. Borrowing from the SNB stood at CHF108 billion as of quarter-end, and that was after Credit Suisse paid back CHF60 billion.
Although one assumes the Swiss would move Heaven and Earth to ensure the merger is ultimately completed, Credit Suisse did note, in the obligatory “risk factors” section, that failure to complete the deal “could seriously jeopardize our financial viability and raise substantial doubt about our ability to continue as a going concern.”
Until the merger is done, risks to the firm — including “the loss of clients, higher employee attrition [and] additional net asset and deposit outflows” — were described as “exacerbated.”
