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Credit Suisse Q3 2021 Results

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A Credit Suisse logo in the window of a bank branch of Credit Suisse Group AG in Zurich, Switzerland on Thursday, April 8, 2021.

Stefan Wermuth | Bloomberg | Getty Images

Credit Suisse topped analysts’ estimates for the third quarter, but was hit by accusations of settling allegations of corruption in Mozambique and other legal issues.

The Swiss bank also revealed that it plans to report a net loss in the last quarter of 2021 and said it plans to cut back on its investment banking operations.

Credit Suisse said on Thursday that net profit attributable to shareholders was 434 million Swiss francs ($ 476 million) for the third quarter, above analysts’ estimate of 333.8 million Swiss francs according to the reports. data from Refinitiv. However, the third quarter results were down more than 20% from the previous year.

The bank said gains from its income were hit by “major litigation charges” of 564 million Swiss francs, including 214 million Swiss francs related to its settlement on the “Mozambique case” and “provisions for disputes in connection with certain other inherited cases “. The Swiss bank has been fined by global regulators following a corruption scandal involving Mozambique’s tuna fishing industry.

Credit Suisse also reported that revenue reached 5.4 billion Swiss francs in the third quarter, up from 5.2 billion Swiss francs a year ago, and that its CET 1 ratio, a measure of bank solvency, was 14.4%, down from 13% a year earlier. .

Reduce investment banking

Credit Suisse also announced a number of changes to its organizational structure.

From January, the bank will reduce its activity in investment banking, abandoning the majority of its prime services activities. As such, he expects stock sales and trading income to decline over the next several months. This comes after various scandals involving the unit, namely its relationship with the collapsed hedge fund Archegos.

“Our goals are clear: we want to become a stronger, more customer-centric bank, which places risk management at the very heart of its DNA in order to generate sustainable growth for investors, customers and colleagues”, Thomas Gottstein, chief executive of Credit Suisse, said in a statement.

The bank said that from January it will be organized into four divisions (wealth management, investment banking, Swiss banking and asset management) at four locations (Switzerland, Europe, Middle East and Africa, Asia -Pacific and Americas).

He announced a refocus on his wealth management division. The unit’s net sales increased 3% to 3.3 billion Swiss francs in the third quarter, with assets under management up 9% to 843 billion Swiss francs.

“The wealth management business returned to strong new net assets and higher transaction revenues sequentially, while recurring commissions and fees and client business volumes showed strong year-over-year momentum. ‘other,’ the bank said in its earnings release Thursday.

The investment banking division of Credit Suisse saw its revenues increase by 10% to 2.5 billion Swiss francs.

Outlook

Looking ahead, the bank said it expects market volumes to slow in the coming weeks as trading stabilizes in the wake of volatility brought on by the coronavirus pandemic.

“Overall, we expect further reduction in market volumes for the remainder of 2021 as the business environment normalizes from the high levels seen in 2020, particularly as central banks begin to report the end of monetary support provided during the COVID-19 crisis, ”he said in his statement.

The Federal Reserve said on Wednesday it would soon start slashing the pace of its monthly bond purchases, as it seeks to scale back its massive stimulus package.

The bank said it would report a loss in the fourth quarter of this year due to a CHF 1.6 billion depreciation related to its acquisition of investment firm Donaldson, Lufkin & Jenrette in 2000.

Shares of the Swiss bank were flat at the start of European trading hours.


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