Credit Suisse shed nearly $69 billion in net assets during the first three months of 2023, its latest quarterly earnings report shows, as a run on deposits cornered the Swiss bank into an emergency merger with rival UBS.
The bank posted a loss of 1.3 billion Swiss francs, or about $1.47 billion. Net profit came in around $14 billion thanks to roughly $16.9 billion in bonds that were written down as part of the merger deal. The bank’s “adjusted” loss came in at around $1.4 billion.
Investors reacted positively to the news, sending Credit Suisse stock up 2.11% in Monday trading.
It’s the latest earnings report to give insight into the March liquidity crisis that led to the demise of two regional U.S. lenders – Silicon Valley Bank and Signature Bank – and sparked regulatory intervention to avert further damage to the global banking system.
The largest banks held strong, with some benefiting from a reshuffling of deposits. But the related panic took a sharp toll on a handful of midsize financial institutions and even some larger ones like Credit Suisse, as depositors left banks that were perceived as weak.
Regional banks saw their stock prices go on a wild ride as investors scoured their balance sheets for possible points of weakness. San Francisco’s First Republic Bank has seen its stock tumble roughly 85% since early March, though the price has begun to recover slightly. First Republic reports its earnings after U.S. markets close Monday.
Meanwhile, megabanks like JPMorgan Chase benefited from a perceived flight to safety, as depositors left smaller financial institutions in favor of larger ones.
JPMorgan Chase, the largest U.S. bank, estimated it gained about $50 billion in net new deposits following the March crisis, as it notched record revenue of $38.3 billion. Citibank saw about $30 billion in deposit inflows, one executive said in an earnings call, as it booked profits of $4.6 billion. Wells Fargo also flourished, drawing a net income of nearly $5 billion.
All three of them saw their stock prices gain more than 10% over the past month, outperforming the S&P 500 by a wide margin.
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