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“The capital position of both banks has improved further,” the central bank said in its 2022 financial stability report.
“In the case of Credit Suisse, the improved capital position is attributable to a capital increase and a reduction in exposure, while at UBS it is due to retained earnings.”
Credit Suisse is reeling from billions in losses racked up in 2021 via failed investments, plus the impact of multiple legal cases.
Earlier this month, it flagged another likely loss for the second quarter, as it signalled lowered capital expectations.
“Over the past four quarters, UBS has recorded a strong increase in profits and its return on assets (ROA) has been among the highest it has achieved in the past two decades. By contrast, Credit Suisse’s ROA has been negative,” the SNB noted in its report.
Differences were also visible in the stock prices of the two banks and other market-based indicators such as credit default swap (CDS) premia, where “the market… continues to have a more positive assessment of UBS than Credit Suisse”.
Nevertheless, bulked-up capital buffers placed both banks on a good footing to face the challenging economic and financial conditions that have developed since end-2021.
“Thanks to these capital buffers, the two globally active Swiss banks are well placed to… cope with the risks stemming from the war in Ukraine,” the SNB said, noting direct impact should be limited given comparatively low exposure to Russia and Ukraine.
Credit Suisse last year raised around 1.75 billion Swiss francs ($1.76 billion) from investors via mandatory convertible notes.
($1 = 0.9952 Swiss francs)
