Credit Suisse today posted another trading update regarding the impact of the recent failure by a US-based hedge fund to meet its margin commitments.
In today’s announcement, Credit Suisse forecasts a pre-tax loss for 1Q 2021 of approximately CHF 900 million. This includes a charge of CHF 4.4 billion in respect of the failure by a US-based hedge fund to meet its commitments.
This will negate the very strong performance that had otherwise been achieved by Credit Suisse’s investment banking businesses and the increase in the year-on-year profits in all three of its wealth management businesses, as well as in asset management, with particular strength in its Asia Pacific division. Net new assets were positive during the quarter across Credit Suisse’s three wealth management businesses as well as in asset management and in the Swiss corporate and institutional business.
In terms of Credit Suisse’s capital position, the bank currently expects the 1Q 2021 CET1 ratio to be at least 12%. With regard to leverage, the company expects its 1Q 2021 Tier 1 leverage ratio to be at least 5.4% and its 1Q 2021 CET1 leverage ratio to be at least 3.7%.
Following the completion of share buybacks in 1Q 2021, Credit Suisse has suspended the share buyback program and it does not intend to resume share purchases before it has regained its target capital ratios and restored its dividend.
As of the end of 1Q21, its liquidity position remains strong with HQLA balances expected to exceed USD 200 billion and the Group liquidity coverage ratio (LCR) expected to exceed 200%.