Credit Suisse Posts Q1 Loss, FINMA Opens Proceedings In Archegos Case; Stock Down

creditcuisse april22 lt

Shares of Credit Suisse Group AG were losing around 6 percent in Swiss trading after the banking major slipped to a loss in its first quarter from a profit last year on hefty charge related to a US-based hedge fund. Net revenues, however, were significantly higher. Looking ahead, the company expects market volumes to return to lower, and more normal, levels in the coming quarters.

Separately, the Swiss Financial Market Supervisory Authority FINMA said it has opened enforcement proceedings against the Swiss lender in the case of US hedge fund Archegos after the bank suffered significant losses. Further, the regulator said it opened proceedings against the bank in the context of the "Greensill" case in March 2021.

FINMA said it will appoint a third-party agent to investigate Archegos case in particular possible shortcomings in risk management. It will also continue to exchange information with the competent authorities in the UK and the USA.

For the first quarter, Credit Suisse net loss attributable to shareholders was 252 million Swiss francs, compared to profit of 1.31 billion francs a year ago. Loss per share was 0.10 euro, compared to profit of 0.52 euro a year ago.

Pre-tax loss was 757 million francs, compared to profit of 1.20 billion francs last year.

The latest quarter-results were significantly impacted by a 4.43 billion francs charge in respect of the failure by a US-based hedge fund to meet its margin commitments on March 26. This offset positive performance across wealth management and investment banking.

Provision for credit losses were 4.39 billion francs, compared to 568 million francs a year ago.

Adjusted pre-tax income was 3.60 billion francs, compared to 946 million francs last year.

Net revenues climbed 31 percent to 7.57 billion francs from 5.78 billion francs in the prior year. Adjusted revenues grew 35 percent to 7.43 billion francs.

Wealth Management-related revenues grew 3 percent and investment Bank revenues in US dollar grew 80 percent.

Assets under management climbed 16.5 percent from last year to 1.60 trillion francs.

Sequentially, net revenues increased 45 percent, primarily reflecting higher net revenues in the Investment Bank, International Wealth Management and Asia Pacific.

The Board continues to propose to distribute a reduced ordinary total dividend of 0.10 franc gross per registered share, half from retained earnings and half out of the capital contribution reserves. The original 2021 AGM proposal was a cash distribution of 0.2926 franc per share for the financial year 2020.

The change was due to the recent developments related to the US-based hedge fund matter.

In Switzerland, Credit Suisse shares were trading at 8.85 francs, down 5.7 percent.

In pre-market activity on the NYSE, the shares were down 6.8 percent to trade at $9.67.

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