Credit Suisse has suffered losses in its global markets and investment banking businesses in the first quarter while the company is in the process of major restructuring. The company’s private banking and robust capital levels have given investors relief.
Chief Executive Tidjane Thiam announced the company’s accelerated focus on improving the groups wealth management business after top executives found large and risky positions documented in the company’s trading book.
Current upheavals in the financial markets are also shaking the entire banking industry and put Credit Suisse in the red for the first time last year since 2008.
Zurich-based Credit Suisse reported a loss of 302 million Swiss francs ($311 million) in the first three months of the year as opposed to a profit of 1.05 billion francs in the first quarter of the year previous.
Earnings before taxes totaled to a negative 484 million francs which beat analyst expectations. Revenue was down 30 percent in the first quarter from 6.65 billion francs earlier to 4.64 billion francs.
“In the first three months of the year, we have remained focused on executing our strategy with three clear priorities: accelerating our cost and head count reduction efforts, delivering profitable growth in wealth-management-focused divisions and maintaining our strong capital position. We have been able to make good progress in all of these areas against an extremely challenging market backdrop,” according to Thiam in a press release.
According to Thiam, global markets and investment banking suffered pretax losses in the quarter from “some of the most difficult markets on record” with client activities and trading volumes “drastically reduced.”
“While we saw tentative signs of a pickup 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,” he added.
Their global markets unit was in the red by 635 million francs pretax compared to a profit of 842 million francs a year earlier. Credit Suisse’s investment banking and capital markets business lost 103 million francs as opposed to only 47 million in losses last year.
The company’s restructuring includes slashing net costs by 1.4 billion francs for the current year by a total of 4.3 billion francs at the end of 2018. Thiam said that the company reached over half of its target in the first quarter alone.
The bank is down to 47,760 employees after cutting 3,500 jobs at the end of the first quarter. The company aims to reduce a total of 6,000 jobs by the end of the year.
Operating expenses have decreased to 4.97 billion francs from 5.11 billion francs in the quarter, a 3 percent decrease.
Despite the challenges faced by the company, its international wealth management unit increased its profits to 270 million francs compared to 263 million francs in the same quarter last year.
The company’s Asia-Pacific business gained 251 million francs in revenues in the first quarter down from 465 million francs the year previous. Its Switzerland bank reported a profit of 426 million francs compared to last year’s 427 million francs.
Eric Varvel will replace Robert Jain as the company’s global head of asset management from the international wealth management business from June 1 under the chief executive of international wealth management Iqbal Kahn.