Credit Suisse Trading Revenue Drops by Half While Rivals Thrive

(Bloomberg) -- Credit Suisse Group AG traders missed out on a boom that lifted competitors as the firm pulled back on risk in the year after a multi-billion-dollar loss that plunged it into crisis.

Equities revenue slumped 47% in the first quarter as the bank reduced risk after the collapse of Archegos Capital Management, including an exit of the prime brokerage business at the heart of the scandal. Credit Suisse’s fixed-income business, typically a source of strength, fared even worse, with both businesses significantly underperforming Wall Street rivals. 

One year on from the collapse of Bill Hwang’s family office, which saddled Credit Suisse with losses of about $5.5 billion, the bank is struggling to mend its business model and move past a series of scandals and profit warnings. While the lender cited “more normalized conditions” within its securitized products business for the fixed-income slump, it’s also less exposed than peers to interest-rate trading and other businesses which did well last quarter.  

“Market conditions were characterized by higher levels of volatility due to geopolitical and macroeconomic uncertainties including increased interest-rate volatility, high levels of inflation and increased energy prices,” Credit Suisse said in its first-quarter earnings report on Wednesday. Rival UBS Group AG reported record revenue at its trading unit on Tuesday. 

Credit Suisse’s emerging markets trading revenue also suffered from $101 million trading losses connected to Russia’s invasion of Ukraine. In the U.S., revenues across credit such as leveraged finance and investment-grade trading decreased due to high volatility and reduced volumes. 

Capital markets revenues fell 66%, largely driven by the lack of initial public offerings and follow-on equity issuances. The global fee pool for ECM decreased 72% this quarter. 

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