Credit Suisse Group CS expects to suffer a financial blow from the sudden collapse of the supply chain finance group, Greensill Capital. In a recent business update, the bank said of the $ 140 million bridging loan it made to Greensill, $ 90 million was still outstanding.
Regarding the suspended supply chain finance funds (net asset value of around $ 10 billion), the Swiss lender has said its recovery is a key priority. Credit Suisse Asset Management would manage the process in close collaboration with the directors of Greensill Capital.
In addition, the company indicated that it has already made progress on this aspect. Initial repayments of around $ 3.1 billion for the four funds have been made since March 8. In addition, he is looking to announce further cash distributions in the coming months.
“While these issues are still at an early stage, we note that Credit Suisse may incur costs for these issues.” said the bank.
Credit Suisse has also provided an encouraging update on its performance in 2021 so far. He noted that he earned the highest level of pre-tax income in January and February, compared to the past 10 years.
In particular, its investment banking unit would benefit from a strong performance from issuance activities in the capital markets and continued good performance from the sales and trading unit. Overall income of investment banks, so far this year, is up more than 50% compared to the same period last year.
In addition, against the backdrop of volatility induced by the pandemic, customer activities are booming, which has supported the growth of activities linked to the bank’s wealth management. Additionally, Credit Suisse said net interest income is stabilizing on a sequential basis, despite low rates, while recurring commissions and fees continue to rise.
Regarding credit quality, the company said that “the credit loss experience remains benign, with signs of improving the global economy starting to benefit from a credit loss allowance in the framework of the current methodology for accounting for expected credit losses “.
Over the past six months, Credit Suisse shares have gained 20.8% versus 45% industry growth.
Currently, Credit Suisse holds a Zacks Rank # 2 (Buy). You can see The full list of Zacks # 1 Rank (Strong Buy) stocks today here.
Actions to consider
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