Plunging client activity and difficult market conditions sent Credit Suisse into a net loss of 302 million Swiss francs (US$311 million) in the first quarter, the bank said yesterday.
Switzerland’s second-largest bank, which is in the middle of a major restructuring program to focus on private banking and wealth management, had earned a net profit of SF1 billion in the same period last year.
“In the first quarter of 2016 and particularly in January and February, we operated in some of the most difficult markets on record with volumes and client activity drastically reduced,” chief executive Tidjane Thiam said in a statement.
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Global markets were roiled at the beginning of the year over fears that the Chinese economy, a key driver of global growth in recent years, would slow sharply.
The loss was less than the SF474 million expected by analysts surveyed by Swiss financial news agency AWP, and the bank’s shares shot up 5.1 percent in early trading in the Swiss market up 0.8 percent overall.
Given the adverse market conditions, Thiam said that Credit Suisse focused on its restructuring program and had made “good progress” on cutting costs and shedding jobs.
The bank announced in March that it was stepping up its cost-cutting effort to SF4.3 billion and would slash another 2,000 jobs.
Thiam said the bank had already achieved more than half of the SF1.4 billion in net cost savings it had targeted for this year and had let go 1,000 people out of 3,500 planned for the year.
Credit Suisse suffered a net loss of nearly SF3 billion last year, which resulted in part from hefty provisions for litigation and charges to restructure its business away from risky investment banking.
It was that business segment, the bank’s Global Markets division, that got hit hard.
“The poor performance was driven especially by the Global Markets division that posted 60 percent lower revenues” year-on-year, analysts at Dutch bank ING said.
The division was hit needing to adjust the value of its assets to lower market prices as well as efforts to reduce risk, they said.
Trading losses came in at SF271 million, although this was an improvement from the SF1.4 billion loss in the final quarter of last year.
However Thiam said the bank’s wealth management had delivered “profitable growth” and said the bank has “attractive long-term opportunities” in the area.
However, the market turbulence that hit first quarter earnings might not be fully over.
“While we saw tentative signs of a pick-up in activity in March and then in April, subdued market conditions and low levels of client activity are likely to persist in the second quarter of 2016 and possibly beyond,” Thiam said.
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