Tens of billions of dollars were withdrawn from Credit Suisse in the first three months of 2023, according to the latest quarterly results announced by the bank on Monday, likely before its rival UBS acquired it.

The second largest bank in Switzerland recorded withdrawals of 61.2 billion Swiss francs ($68.6 billion) in the first quarter alone.

At the same time, the bank's net profit rose to 12.4 billion francs, after a significant loss last year, thanks to the takeover of high-risk Credit Suisse debt, as part of the deal with UBS.

Investors were awaiting the results to see indications of the scale of the challenges that UBS faces.

Credit Suisse said the "significant drawdowns of net assets" were particularly large in the second half of March, when panic set in ahead of the hastily made takeover.

"Withdrawals have calmed down, but the movement until April 24, 2023 had not returned to what it was," he added in his return report.
At the same time, the bank said its net profit rose to 12.4 billion francs.

As part of the massive merger between the two Swiss banks last month, the Swiss authorities demanded that 16 billion Swiss francs ($17.9 billion) of "Additional Tier 1 Capital" (AT1) be deemed worthless.

The decision by the Swiss Financial Market Supervisory Authority (FINMA) angered bondholders, who launched legal action against the regulator.
Credit Suisse said that its quarterly results were also strengthened by selling part of its securitized financial assets (the securitization is based on converting debts into sukuk and bonds and putting them on the market to obtain liquidity), to Apollo Global Management.

However, the bank said it incurred pre-tax losses of a quarter of the CHF1.3 billion.

The bank, which last October launched a broad restructuring plan including the creation of its investment arm, said the branch suffered an adjusted pre-tax loss of 337 million in the first quarter.

And he warned that "in light of the merger announcement and the negative impact on revenues (...) and restructuring fees and financing costs," it is expected to record "tangible" losses in the second quarter and in general at the level of all of 2023.

Monday's quarterly report could be Credit Suisse's last, depending on how long it takes to finalize the merger with UBS.

Credit Suisse has been exposed to a number of scandals in the past years, and after the collapse of three local US banks sparked panic in the financial markets, the bank seemed the weakest link in the chain.

During a frantic weekend, Swiss authorities orchestrated an emergency bailout and pressured UPS to agree to a major merger worth $3.25 billion on the night of March 19.

In justifying the decision to Parliament earlier this month, Swiss President Alain Berset said, "Without the intervention, Credit Suisse would probably have found itself in default on the 20th or 21st of March."

In 2022, Credit Suisse suffered a loss of CHF7.3 billion, with CHF110.5 billion in withdrawals recorded in the last quarter alone.

This is in stark contrast to the $7.6 billion in profits reported by UPS last year.

UBS is expected to publish its first-quarter results on Tuesday.

Analysts at Zurich Cantonal Bank acknowledge that UBS' results will be a "sideshow", as attention is drawn to "doubts surrounding the planned merger with Credit Suisse".

Vontobel analyst Andreas Vendetti agrees, warning in a research note that the Credit Suisse report "reveals the poor state of the institution".

"UPS undoubtedly faces the big (and urgent) task of carrying out a deep restructuring of its former rival," he said.