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Credit Suisse (CS) Expects Greensill Charge to Mar IB Boom

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Credit Suisse Group (CS - Free Report) expects to take a financial hit as a result of sudden collapse of supply-chain finance group, Greensill Capital. In a trading update provided recently, the bank said that of the $140 million bridge loan it had provided to Greensill, $90 million still remains outstanding.

Regarding the suspended supply chain finance funds (net asset value of about $10 billion), the Swiss lender said that its recovery is a key priority. Credit Suisse Asset Management is said to be managing the process closely with administrators of Greensill Capital.

Furthermore, the company informed that it has already made some progress on this aspect.  Initial redemption repayments of about $3.1 billion for the four funds have been made since Mar 8. Also, it seeks to announce further cash distributions over the coming months.

“While these issues are still at an early stage, we would note that it is possible that Credit Suisse will incur a charge in respect of these matters.” said the bank.

Credit Suisse also provided some encouraging update on its performance in 2021 so far. It noted to have earned highest level of income before taxes in both January and February, when compared to the past 10 years.

Notably, its investment banking unit is said to be benefiting from robust performance of capital markets issuance activities and from a continued good performance across sales & trading unit. Overall investment bank revenues, so far this year, are up more than 50% compared to the same period last year.

Moreover, on the back of pandemic-induced volatility, client activities are on a surge, which have supported growth in the bank’s wealth management-related businesses. Also, Credit Suisse said that the net interest income is stabilizing on a sequential basis, despite low rates, while recurring commissions and fees continue to increase.

Regarding credit quality, the company said “credit loss experience remains benign, with signs of improvement in the global economy beginning to benefit allowance for credit losses under the current expected credit loss accounting methodology.”

Over the past six months, shares of Credit Suisse have gained 20.8% compared with 45% growth recorded by the industry.

Currently, Credit Suisse carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks to Consider

Shinhan Financial Group Co Ltd (SHG - Free Report) has witnessed upward earnings estimate revisions for 2021 in the past 60 days. Moreover, this Zacks Rank #2 stock has gained 30% in six months’ time.

Bank Of Montreal’s (BMO - Free Report) current fiscal-year earnings estimates have moved north in 60 days’ time. Further, the company’s shares have appreciated 45% over the past six months. At present, it flaunts a Zacks Rank of 1.

Barclays PLC (BCS - Free Report) has witnessed upward earnings estimate revision for the ongoing year in the past 60 days. This Zacks #2 Ranked stock has gained 102.2% in the past six months.

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