Credit Suisse has released its financial results for the first quarter of 2023. The lender’s performance was impacted by its merger with UBS Group AG, which was announced in March.
Furthermore, the quarterly results were also influenced by a CHF 15 billion write-down in Additional Tier 1 (AT1) capital notes provided by the Swiss Financial Market Supervisory Authority (FINMA).
Credit Suisse reported that for the first three months of the year, its pre-tax income reached pre-tax income of CHF 12.8 billion.
The bank’s adjusted net revenue stood at CHF 2.8 billion, registering a 40% decline compared to the first quarter in 2022. The adjusted pre-tax loss came in at CHF 1.3 billion for Q1, increasing by CHF 300 million compared to the previous quarter.
The official announcement detailed that significant deposit and net asset outflows impacted Credit Suisse’s financial result for the period. As a result, assets under management (AuM) were CHF 1.3 trillion for Q1 2023, decreasing by CHF 41 billion compared to the fourth quarter of the previous year.
During the first quarter, Wealth Management and Swiss Bank experienced net asset outflows of over CHF 61 billion, of which 57% were represented by deposit outflows. This implies that a significant portion of the outflows were from deposit accounts during the three-month period ending in March.
The bank highlighted that despite the instability surrounding the merger with UBS, Credit Suisse is taking steps to mitigate risk.
The company commented:
Credit Suisse is taking proactive measures to protect its client franchise, manage risks and facilitate operational stability.
Credit Suisse has successfully reduced the asset equivalent exposures of its Special Purpose Group (SPG) by around USD 48 billion, which is more than 85% of the targeted reduction of USD 55 billion. This move has positively impacted SPG and its related financing businesses.
Furthermore, the Non-Core Unit (NCU) has seen significant reductions in its 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 the bank’s dedication to optimizing its balance sheet and minimizing risk.
The bank has also made notable progress on its cost transformation program, with adjusted operating expenses in Q1 2023 decreasing by 6% YoY, attributed to lower expenses and a reduction in compensation and benefits.
Credit Suisse announced that it will cut a total of 36,000 jobs across both units, with the process accelerated due to the UBS takeover.
Lastly, Credit Suisse and M. Klein & Co LLC have mutually agreed to terminate the acquisition of The Klein Group, LLC due to the recently announced merger with UBS Group AG.
