By John Letzing
ZURICH-- Credit Suisse Group AG provided a rough outline for a
potential bite out of profit at the bank thanks to the recent surge
in value of the Swiss franc on Wednesday, but added that it did not
suffer "material" trading losses due to the currency swing.
Last week, the Swiss National Bank abruptly canceled its policy
of capping the value of the franc to 1.20 per euro, sending the
value of the franc significantly higher. The move is expected to
have an impact on the profitability of many Swiss banks, including
Zurich-based Credit Suisse, which derive much of their income in
currencies that have suddenly declined in value to the franc.
On Wednesday, Credit Suisse pointed to previous guidance from
the bank issued last October, which noted that a 10% move in the
value of the franc relative to the euro could have shaved 180
million francs ($209 million) from its pretax profit for the first
three quarters of last year. The bank then noted that according to
current exchange rates the franc has fallen 20% below its average
value relative to the euro last year. Credit Suisse noted that its
"sensitivities" to swings in the value of the franc relative to the
euro remain unchanged since the guidance issued last October,
though the actual impact on the bank's profitability this year
remains to be seen.
In addition, Credit Suisse said it didn't suffer "any material
trading losses" related to the recent volatility in foreign
exchange rates.
Credit Suisse shares have fallen nearly 17% since the Swiss
central bank announced its change of policy on capping the franc
last Thursday.
Write to John Letzing at john.letzing@wsj.com
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