Credit Suisse reported its Q1 earnings with net losses of CHF 252mn ($275mn). CS said the losses reflected a “significant charge with respect to the US-based hedge fund matter in 1Q21, offsetting positive performance across wealth management and investment banking”. Net revenues increased 31% to CHF 7.57bn ($8.26bn) bolstered by Investment Banking (IB) revenues at $3.9bn, up 80%. Provisions for credit losses jumped significantly to CHF 4.39bn ($4.79bn) from CHF 568bn ($620bn) in Q1 2020. CEO Thomas Gottstein said “Our results for the first quarter of 2021 have been significantly impacted by a CHF 4.4 bn charge related to a US-based hedge fund. The loss we report this quarter, because of this matter, is unacceptable. Together with the Board of Directors, we have taken significant steps to address this situation as well as the supply chain finance funds matter”. WSJ reported yesterday that CS had over $20bn in exposure to Archegos. CS said it exited 97% of its trading positions relating to Archegos and expects to report an additional loss ~CHF 600mn ($654mn) in Q2 2021. The bank’s CET1 Ratio fell to 12.2% vs 12.9% end-2020.
Given the impact of Archegos and that of Greensill, CS said it is raising $1.9bn in capital to build its balance sheet which would help lift its CET1 ratio to 13%. Besides, Finma, the Swiss regulator has opened enforcement proceedings against Credit Suisse in relation to potential risk management shortcomings.
CS’s dollar bonds were flat with its 3.45% 2021s and 4.55% 2026s trading at 100.009 and 113.238 on the secondary markets.
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