Credit Suisse Q1 Profit Climbs, Warns On Covid-19 Impacts; Stock Down

(RTTNews) - Shares of Credit Suisse Group AG (CS) were losing around 3 percent in Swiss trading after the banking major cautioned Thursday about further uncertainties resulting from the COVID-19 pandemic, despite reporting significant profit growth in the first quarter.

Going ahead, Credit Suisse said the pandemic and the consequences for markets and the global economy, at least in the first half of 2020, would likely affect its financial performance. This will include potentially significant impacts for credit loss estimates, as well as impacts on trading revenues, net interest income and potential goodwill assessments.

The company has absorbed a significant reserve build of over 1 billion Swiss francs. Further, the firm said the scale of the adverse economic impact of the COVID- 19 crisis is still difficult to assess and that it may also see further reserve build and impairments in the coming quarters. This will be particularly in Corporate Bank and other loans, outside Switzerland, as well as from investments in Asset Management.

The company also cautioned that the recovery in advisory and underwriting fees might be limited, at least in the short term until the pandemic eases and the global economy begins to recover.

For the first quarter, net income attributable to shareholders climbed 75 percent to 1.31 billion Swiss francs, its highest quarterly result in the last five years, from 749 million francs last year. Earnings per share grew 79 percent to 0.52 franc from 0.29 franc a year ago.

Pre-tax income grew 13 percent to 1.2 billion francs. Excluding the gain from the InvestLab transfer and major litigation provisions, pre-tax income would have been 951 million francs, down 11 percent year on year. Total operating expenses declined 6 percent from last year to 4.01 billion francs.

Net revenues for the quarter grew 7 percent to 5.78 billion francs from 5.39 billion francs a year ago. The results mainly reflected higher net revenues in Asia Pacific, Swiss Universal Bank and Global Markets, partially offset by lower net revenues in Investment Banking & Capital Markets.

Excluding InvestLab transfer gain, net revenues would have been up 2 percent. Net interest income, meanwhile, was flat at 1.53 billion francs.

Provision for credit losses for the quarter was 568 million francs, up from 81 million francs last year.

For the quarter, assets under management fell 4 percent from last year to 1.37 trillion francs.

In Switzerland, Credit Suisse shares were trading at 7.51 francs, down 2.52 percent.