Banking giant Credit Suisse announces unexpected Q3 earnings profit, bolsters legal reserve allocations
In a surprising turn of events, Credit Suisse, the Swiss banking giant, reported an unexpected net profit of 41 million Swiss francs ($42.2m) for the third quarter of 2019. This profit came as a surprise, as the average estimate for the same period was a loss of 120 million Swiss francs.
Tidjane Thiam, the CEO of Credit Suisse since July 2015, outlined his turnaround plan in October 2019, focusing on growing in wealth management and reducing reliance on investment banking. This strategic shift has received support from major investors, aiming to stabilise the bank's earnings.
One of the significant developments in the third quarter was the increase in litigation provisions by 357 million Swiss francs. This increase was primarily due to mortgage-related matters, such as residential mortgage-backed securities (RMBS) cases. This move was followed by a similar move by rival UBS, which set aside an additional $417m.
Despite the profit, the outlook for Credit Suisse remains challenging due to tough market conditions. Thiam has warned about lower transaction levels and anticipated geopolitical and macro-economic uncertainty to influence market activity for several quarters ahead.
The bank's net new money inflows totaled 9.2 billion francs in the three private banking divisions during the third quarter of 2019. This volatile but important indicator of future earnings in private banking indicates a positive trend for the bank.
Credit Suisse's common equity Tier 1 capital ratio rose to 12% in the third quarter of 2019, exceeding the top end of its target of 11-12% for 2016. This indicates a strengthening financial position for the bank.
However, the bank's shares have decreased almost 40% so far this year, reflecting the ongoing challenges faced by the bank. Thiam has warned about the negative impact of tough markets, which have previously impacted the bank's performance in 2016.
As of mid-2025, Credit Suisse's financial performance is no longer reported separately since its acquisition and ongoing integration into UBS. UBS, which reported strong Q2 2025 results with a profit before tax of $2.2 billion and total revenues of $11.6 billion, is expected to continue this integration through 2026.
Regarding the specifics of mortgage-related litigation provisions at Credit Suisse or UBS, no explicit details have been disclosed in recent quarterly or public filings. UBS acknowledges the general risk that Credit Suisse's acquired liabilities may be larger than expected, but specific details about mortgage litigation provisions are not provided in available sources.
Regulatory and operational challenges continue at UBS, potentially affecting future provisioning but unrelated to mortgage litigation specifically. For more granular data on mortgage litigation provisions, consulting UBS’s detailed financial disclosures or regulatory filings post-Credit Suisse acquisition would be necessary.
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