Uncertainty among Credit Suisse clients took a heavy toll on the bank's wealth management business in the first quarter as clients pulled tens of billions out.
Over three-fourths of the 61.2 billion francs ($68.6 billion) that Credit Suisse's clients took out of the bank came in the wealth management unit, with all regions affected, Credit Suisse announced Monday in a very pared-down first-quarter report.
In total, clients moved 47.1 billion francs of the wealth they previously had entrusted to Credit Suisse elsewhere, confirming the trend that started last autumn was irreversible. That was nine percent less than overall assets under management at the end of last year.
Fewer Loans
Wealth management reported a one-third in percentage terms in net revenues from the comparable year-ago quarter. At the same time, net interest income fell 37 percent, mainly reflecting lower loan margins on lower average loan volumes, higher costs related to interest rate management, and higher funding costs. These were only partially offset by higher deposit margins despite significantly lower average deposit volumes.
Recurring commissions and fees declined 17 percent, impacted by a lower average AuM. Transaction- and performance-based revenues were down 43 percent, primarily due to reduced client activity, but were 9 percent higher on a quarterly basis.
High Restructuring Charges
The pre-tax loss of 1.5 billion Swiss francs was due to a goodwill impairment charge of 1.3 billion Swiss francs, with restructuring charges amounting to an additional 46 million francs.
Adjusted pre-tax income was again in the red to the tune of 115 million francs compared to 106 million francs in the fourth quarter, standing in stark contrast to the prior year's quarterly profit of 219 million francs.
No Signs of Improvement
Anyone looking for a bright spot in the wealth management division is likely to be disappointed. The lower AuM and deposit base in the first quarter will have downstream effects.
That is «expected to lead to reduced net interest income and recurring commissions and fees. In particular, this will likely lead to a substantial loss» for wealth management in the second quarter.
