ZURICH--Credit Suisse Group AG's delivered a disappointing
profit figure for the first quarter, as the Swiss lender was
weighed down by the performance of its investment bank.
Zurich-based Credit Suisse, like its larger Swiss rival UBS AG,
is in the process of trying to squeeze more profit from a
slimmed-down operation. The bank has steadily shed assets and
employees, while shuttering some businesses it deemed were too
risky or not worth the costs involved.
Overall, first-quarter profit at the bank fell to 859 million
Swiss francs ($975.47 million) from the 1.3 billion francs it
reported for the same period a year earlier, as net revenues fell
8% to 6.47 billion francs. Analysts had expected the bank to report
a profit of 1.13 billion francs for the period.
Credit Suisse said total assets on its balance sheet fell 7% in
the quarter compared with the same period last year, to 878 billion
Swiss francs.
Credit Suisse's investment bank relies to a significant degree
on debt-trading businesses, which can be particularly volatile. The
bank said Wednesday that while its debt trading and underwriting
businesses were strong during the period, its diminished interest
rate-trading unit and performance in emerging markets contributed
to net revenues declining 13% compared with the same quarter last
year. Pretax income slipped 36% to 827 million francs.
The private banking & wealth management business saw 13.7
billion francs in net new assets during the quarter, Credit Suisse
said, though clients from Western Europe with Swiss accounts
continued to pull money out of the bank as tax authorities in their
countries crack down on undeclared assets. Net revenues were flat
at 3.2 billion francs, while pretax income rose 15%.
Credit Suisse has taken some significant hits to its reported
results lately because of legal travails in the U.S. Earlier this
month the bank said it had taken a charge of 468 million francs
primarily related to a continuing criminal investigation by the
U.S. Justice Department into assistance the bank may have provided
to American tax evaders. Last month, the bank disclosed a charge of
275 million francs related to allegations made by the U.S. Federal
Housing Finance Agency that it was one of several banks that
misrepresented mortgage-backed securities it sold in the run-up to
the financial crisis.
Credit Suisse executives, including Chief Executive Brady
Dougan, were called to testify at a Senate hearing in February,
where they were criticized for making little progress in helping
the U.S. Justice Department track down the identities of American
clients who used accounts at the bank to evade taxes. Credit Suisse
is one of about a dozen Swiss banks under Justice Department
investigation for allegedly helping Americans evade taxes, and is
expected to reach a related settlement.
Credit Suisse and UBS are also under significant pressure from
regulators at home in Switzerland, who are eager to see the
country's two big banks increase stability and shed risk. Credit
Suisse earlier this year said discussions with the country's
financial regulator, Finma, resulted in it adding 6.9 billion
francs in so-called operational risk-related assets to its balance
sheet to buffer against unforeseen negatives in the future such as
costly litigation. On Wednesday the bank said its operational
risk-related assets stood at 5.3 billion francs.
The bank said its leverage ratio, a measure of capital held
relative to assets such as loans, reached 3.7% and is on track to
meet Switzerland's requirement of about 4% by 2019.
Write to John Letzing at john.letzing@wsj.com
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