Credit Suisse Outlines Possible Profit Loss Due to Franc Swing

By John Letzing 

ZURICH-- Credit Suisse Group AG provided a rough outline Wednesday for a potential profit loss at the bank, due to the recent surge in value of the Swiss franc, but added that it didn't suffer "material" trading losses from the currency swing.

Last week, the Swiss National Bank abruptly canceled its policy of capping the value of the franc to 1.20 per euro, sending the value of the franc significantly higher. The move is expected to have an impact on the profitability of many Swiss banks, including Zurich-based Credit Suisse, which derive much of their income in currencies that have suddenly declined in value to the franc.

On Wednesday, Credit Suisse pointed to previous guidance from the bank issued last October, which noted that a 10% move in the value of the franc relative to the euro could have shaved 180 million francs ($209 million) from its pretax profit for the first three quarters of last year. The bank then noted that according to current exchange rates the franc has fallen 20% below its average value relative to the euro last year. Credit Suisse noted that its "sensitivities" to swings in the value of the franc relative to the euro remain unchanged since the guidance issued last October, though the actual impact on the bank's profitability this year remains to be seen.

In addition, Credit Suisse said it didn't suffer "any material trading losses" related to the recent volatility in foreign exchange rates.

Credit Suisse shares have fallen nearly 17% since the Swiss central bank announced its change of policy on capping the franc last Thursday.

Write to John Letzing at [e-mail]

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