'Drastically reduced' client activity sends Credit Suisse into loss
Plunging client activity and difficult market conditions sent Credit Suisse into a net loss of 302 million Swiss francs (273 million euros, $311 million) in the first quarter, the bank said Tuesday.
Switzerland's second largest bank, which is in the midst of a major restructuring programme to focus on private banking and wealth management, had earned a net profit of 1 billion francs in the same period in 2015.
"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.
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 474 million francs 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 programme, and had made "good progress" on cutting costs and shedding jobs.
The bank announced in March it was stepping up its cost cutting effort to 4.3 billion francs and would slash another 2,000 jobs.
Thiam said the bank had already achieved more than half of the 1.4 billion francs in net cost savings it had targeted for 2016, and had let go 1,000 people out of 3,500 planned for the year.
Credit Suisse suffered a net loss of nearly 3.0 billion francs in 2015, 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 said analysts at Dutch bank ING.
The division was hit needing to adjust the value of its assets to lower market prices as well as efforts to reduce risk, it added.
Trading losses came in at 271 million francs, although this was an improvement from the 1.4 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.
But the market turbulence that hit first quarter earnings may 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," said Thiam.
© 2016 AFP