The most important questions and answers about CS numbers

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Credit Suisse’s quarterly results provide a detailed insight into the bank’s books for the first time since its takeover by UBS on March 19.

Credit Suisse spent CHF 61.2 billion in the first quarter. This is why the outflow is smaller than feared: In the fourth quarter of 2022, CS outflowed almost twice as much at CHF 110 billion.

Analyst Andreas Venditti (50) of Bank Vontobel sees no reason for too much optimism: “Most of the 61 billion flowed in March. This shows how serious this month has been for the bank.” According to the earlier statements of CS Chairman Axel Lehmann (64), the situation stabilized in January and February and worsened again in the days before 19 March.

Also, cash outflows are less than in the fourth quarter of 2022, but “still massive” in the words of ZKB analyst Michael Klien (45).

As the bank itself wrote, the money outflow was still unstoppable: “These outflows have decreased since then, but a trend reversal was not observed until April 24, 2023.”

Money outflows in the first quarter were particularly large in wealth management (-9 percent), ie among wealthy private clients. In asset management, fund outflow was slightly lower at -3 percent compared to institutional assets. With “only” 1 percent of assets under management flowing out, the Swiss bank did best. This suggests that Swiss small savers rushing to ATMs are not primarily responsible for the bank’s difficulties. But big customers from all over the world who lost their trust in CS.

To other banks and asset managers. For example, Zürcher Kantonalbank (ZKB) crossed the billion mark for the first time last year. You may also have benefited from the flight of CS customers. Private banks should also benefit from CS turbulence.

However, a lot of money should go to international competitors, not Swiss competitors, because international clients in wealth management and wealth management have drawn more money from the Swiss bank than local savers.

CS writes an adjusted loss of 1.3 billion francs in the first quarter. The loss is of similar magnitude as in the last quarter of 2022. Sixth quarter loss in a row.

Surprising at first glance, the bank posted a net profit of 12.4 billion in the first quarter. However, this is due only to one-off effects, in particular AT1 losses of CHF 15 billion ordered by the Financial Markets Authority (Finma) as part of the merger. Adjusted for this and other special effects, the result is a billion-dollar loss.

For the second quarter, CS again expects a “significant loss” as it writes. Vontobel analyst Venditti estimates there could be “more than a billion quarterly losses”.

The takeover of CS by UBS should be completed in the second quarter. The figures for the second quarter will probably be reported together by the two banks, rather than separately anymore. “UBS will need to be restructured as soon as possible to reduce CS losses,” Venditti predicts.

Because even if UBS itself is writing high profits, it can’t let CS waste a billion every quarter on its business units.

UBS will release its quarterly figures on Tuesday morning. In this context, it is possible to explain more details about the status of the takeover. Analysts expect UBS to make a healthy profit in the first quarter, for example, Venditti projects a net profit of 1.7 billion.

Shares of both CS and UBS rose Monday morning. At lunch, CS was over 2 percent and UBS was just under 2 percent.

This is while the overall market is barely moving. ZKB analyst Michael Klien sees this as a sign that the market will expect even worse numbers from CS. “Now investors are pleasantly surprised.”

Source :Blick