Credit Suisse (NYSE:CS) reported net asset outflows of CHF61.2 billion ($68.6 billion) and CHF67 billion in deposit balance wipeouts for the first quarter of 2023. The majority of this outflow occurred in March, which was shortly followed by UBS Group’s (UBS) quick rescue of Credit Suisse.
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The key reason behind these outflows was a statement made by Credit Suisse’s largest shareholder, Saudi National Bank, that it would not offer the bank any financial support.
The majority of the net outflows reported by Credit Suisse were in its core business, Wealth Management, which also saw an impairment charge of CHF1.3 billion. Credit Suisse reported that these outflows have stabilized at lower levels compared to March but have not yet reversed.
The size of the outflows is significant, reflecting the difficulty UBS will face in integrating the two major Swiss banks, which could take up to four years.
In the latest earnings report, Credit Suisse reported a Q1 profit of CHF12.43 billion due to the write-off of AT1 bonds during the quarter. Meanwhile, the adjusted pre-tax loss came in at CHF1.3 billion.
Additionally, Credit Suisse stated that it expects a decline in full-year net interest income as well as recurring commissions and fees due to the significantly lower deposits in the quarter. In the second quarter of 2023, it also anticipates incurring a sizable loss in the Wealth Management division.
Is CS a Good Stock to Buy?
Wall Street has a Hold consensus rating for CS stock, with an average analyst price target of $2.94, implying upside potential of 229.89% from current levels.
