The Strategist

Capital outflows from Credit Suisse total nearly $69B in Q1

04/25/2023 - 07:34

Credit Suisse counted almost $69 billion in capital outflow during the first quarter as the Swiss bank was dealing with a crisis. The bank said that the outflows reduced after the decision to acquire UBS, but have not yet ceased.

The bank's financial statement press release states that Credit Suisse recorded a net outflow of 61.2 billion Swiss francs ($68.6 billion) during the first quarter. Wealth Management, the company's main asset management division, saw a 9% decline in assets during the first quarter. 67 billion Swiss francs ($75.1 billion) less was placed by customers.

According to the statement, Credit Suisse "experienced significant withdrawals of cash deposits in the second half of March 2023 as well as non-renewal of deposit maturities." The days leading up to and shortly following the news of Credit Suisse's impending acquisition by UBS saw the greatest withdrawals. Although the rate had decreased significantly by April 24, the bank acknowledged that the outflow had not yet ceased.

The bank's revenue increased by 4.2 times, from 4.4 billion francs ($4.9 billion) to 18.5 billion francs ($20.7 billion). In comparison to a loss of 273 million francs ($0.31 million) during the same period last year, Credit Suisse reported a net profit of 12.432 billion francs ($13.93 billion) during the months of January through March. According to the Financial Times, this can be explained by the nominal value of Additional Tier 1 bonds being written down by 16 billion Swiss francs ($17.3 billion). This action temporarily raised the financial strength ratio of Credit Suisse's common shares from 14.1% to 20.3%. The bondholders are now contesting this in court and seeking damages reimbursement.