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Investors Look Forward To Credit Suisse And UBS Results

April 22, 2023
minute read

When Credit Suisse releases its probable final quarterly results on Monday, investors will be looking for signs about the enormity of the issues that await UBS, after it was coerced into taking over its ailing rival.

As Switzerland's largest bank prepares to swallow its long-time local competitor, Credit Suisse, its results will be released the day before those of UBS.

The findings, which will be released in a statement without the traditional press conference and analyst debate, will be heavily scrutinized for the large withdrawals that occurred last month when panic gripped the bank before to the hurriedly organized takeover.

Taking over Credit Suisse will be a difficult process, and "we won't have all the answers we need," Swissquote analyst Ipek Ozkardeskaya told AFP, noting that "the merger is new and (even) UBS didn't have enough time to dive into Credit Suisse's business."

The analyst predicted that the answers to the numerous unanswered questions about the severity of Credit Suisse's crisis would come "gradually," adding that she anticipated UBS to "take control of the situation and structure the bank in a healthy way" over time.

Credit Suisse had been embroiled in a series of scandals for several years, and when three US smaller banks failed in March, causing market panic, it appeared to be the weakest link in the network.

Over the course of a tense weekend, Swiss authorities orchestrated an emergency rescue, compelling UBS to agree to a $3.25 billion mega-merger on March 19.

Swiss President Alain Berset justified the decision to parliament earlier this month, stating that "without intervention, Credit Suisse would have found itself, in all likelihood, in default on March 20 or 21."

According to Vontobel analyst Andreas Venditti in a research note, Monday's quarterly report would likely be Credit Suisse's final, depending on how swiftly the UBS acquisition closes.

He expected that "the market will focus on the magnitude of outflows across businesses" after the data was disclosed.

Some figures are already in circulation.

According to figures gathered by the US financial services firm, the bank had 4.6 billion euros ($5.1 billion) taken from funds in March alone, the largest monthly outflow on record.

Venditti predicted that Credit Suisse's first-quarter reports would "reveal very weak underlying results."

He anticipated that the bank would incur a net loss of roughly 700 million Swiss francs ($784 million), with an 800-million-franc gain from the sale of its Securitised Products Group assisting it in avoiding a much larger loss.

The bank lost 7.3 billion francs in 2022, with 110.5 billion francs in outflows in the last quarter alone.

This was in sharp contrast to UBS's $7.6 billion profit last year.

Venditti predicted that UBS will report a first-quarter profit of approximately $1.7 billion on Tuesday, down from $2.1 billion at the same time last year.

He predicted decreased performance owing to "lower recurring fee income," but that this would be "partially offset by higher net interest income" as interest rates rise.

However, investors would be particularly "interested in receiving additional details of the CS deal," Venditti said, adding that "we do not expect much additional information, given that the transaction has not closed yet."

Analysts at Zurich Cantonal Bank (ZKB) agreed that UBS's earnings would be "a sideshow," with all focus on "the uncertainties surrounding the proposed merger with Credit Suisse."

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