Credit Suisse has reported that it made its biggest quarterly losses in close to six years over the second quarter of 2014, as the banking giant covers the cost of penalties levelled by the US authorities.
The bank’s results published today (July 22nd) reveal that in the three months to June, it lost a total of 700 million Swiss francs (£455.6 million). In the same period last year, profits stood at 1.05 billion francs.
As a result, Credit Suisse’s share price fell in today’s early trade. By 09.21 BST, it had slipped by 0.52 per cent to 25.57 francs.
The figures suggest that the bank would have been comfortably in profit over the quarter if had not had to pay a charge of 1.6 billion francs to fund a settlement with US regulators over charges of tax evasion.
Uncertainty around the progress of the lawsuit and the effect of the bank’s decision to plead guilty to criminal charges are thought to have put some clients off putting their money into Credit Suisse’s wealth management unit.
That is an increasingly important area for the bank, since new rules have stemmed the potential profits from its main line of investment banking. Bloomberg reports that in 2013, wealth management generated a third of Credit Suisse’s revenue.
Chief executive Brady W. Dougan said that excluding the impact of the huge settlement, performance had been largely strong.
“During the quarter, we continued to see good momentum with clients, while at the same time making further progress in winding-down our non-strategic units,” he explained.
“Our strategic results were solid, demonstrating the resilience of our business model, notwithstanding subdued client trading activity in certain areas which impacted both private banking & wealth management and investment banking.”
He added that the bank has finally brought all of the outstanding litigation to an end by paying the charge, meaning the bank can now move forward and face the future.
However, it is also planning to withdraw from its subscale commodities trading business, where profits are also curtailed by new regulation.
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