Financial Results

Credit Suisse Q1 Figures Underscore Financial Pains; UBS Risk Chief Delays Departure

Tom Burroughes Group Editor London 24 April 2023

Credit Suisse Q1 Figures Underscore Financial Pains; UBS Risk Chief Delays Departure

Credit Suisse, while still reporting separate results as the UBS takeover goes ahead, fleshed out financial results for the quarter, highlighting the impact of AT1 debt write-downs and outflows of deposits. Separately, UBS said its chief risk officer, who had been planning to leave to pursue a new career, has agreed to stay on.

Credit Suisse, which is in the process of being acquired by UBS today reported an adjusted pre-tax loss of SFr1.316 billion ($1.48 billion) for the first three months of 2023, against a pre-tax income of SFr300 million a year earlier. Separately, UBS said its chief risk officer, who had been scheduled to stand down and hand over to a successor, will remain in the role for the foreseeable future.

Net revenues fell by 40 per cent year-on-year to SFr2.734 billion in the quarter; while total operating costs fell 6 per cent to SFr3.966 billion, Credit Suisse said.

The bank is continuing to issue figures as a separate business entity while its larger rival, UBS, continues to acquire it and integrate the business. The banks are, at the behest of the Swiss authorities, merging after Credit Suisse’s financial fortunes became increasingly parlous after a series of scandals and missteps. 

“Credit Suisse’s performance in [the quarter] was mainly impacted by actions leading up to and stemming from the planned merger,” the bank said in a statement. 

On a reported basis, pre-tax income was SFr12.764 billion, against a loss of SFr428 million a year ago. The Q1 2023 figure was mainly explained by the write-down to zero of SFr15 billion of Additional Tier 1 capital notes, as ordered by the Swiss Financial Market Supervisory Authority, or FINMA. (That write-down, which has been controversial, has reportedly triggered lawsuits from certain investors.) The reported pre-tax income figures were also affected by a SFr700 million gain from the sale of a significant part of the Securitized Products Group, it said.

In the second half of March this year, the bank said it experienced “significant withdrawals of cash deposits as well as non-renewal of maturing time deposits.” Customer deposits sank by SFr67 billion in the quarter. These outflows, which were most acute in the days immediately preceding and following the announcement of the merger, stabilised to much lower levels, but had not reversed as of 24 April, 2023,” the bank said.

Among other details, Credit Suisse said wealth management adjusted net revenues fell 33 per cent in Q1 2023 from a year ago, mainly reflecting lower loan margins on lower average loan volumes, higher costs related to interest rate management and higher funding costs, partly offset by higher deposit margins. Recurring commissions and fees fell by 17 per cent, as average assets under management fell. Wealth management experienced net asset outflows of SFr47.1 billion in the quarter, with outflows taking place in all regions.

Chief risk officer stays on for longer
UBS said today that Christian Bluhm has agreed to remain as group chief risk officer and member of the group executive board for the “foreseeable future.” This will delay the handover to Damian Vogel which was originally planned for 1 May. Bluhm had planned to focus more on a photography business.

Vogel has been appointed to the newly-created role of group risk control head of integration. As such, he will lead risk control-related integration activities and define the best possible set-up for the firm’s combined group risk control function. (This position is clearly a crucial one, given the need by UBS to ensure that the enlarged business gets on top of risk management.)

“Having both senior risk leaders actively engaged will help ensure that we’re well prepared and appropriately set up in an area that is crucial for our future success. I want to thank Christian for his readiness to continue in his role as group chief risk officer and Damian for his significant efforts in leading our integration efforts and designing our future risk function,” Sergio Ermotti, UBS chief executive, said. 

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