Credit Suisse says risk calculation, hedging change to reap $250 million

This post was originally published on this site
© Reuters. FILE PHOTO: Logo of Swiss bank Credit Suisse is seen Zurich© Reuters. FILE PHOTO: Logo of Swiss bank Credit Suisse is seen Zurich

ZURICH (Reuters) – Credit Suisse (S:) on Wednesday said it expects an estimated $250 million boost in annual profit from higher net interest income it expects to reap by calculating risk-weighted assets in dollars rather than Swiss francs.

While the Zurich-based bank has decided to continue financial reporting in Swiss francs, Credit Suisse said it would calculate its Group Operational Risk risk-weighted assets in dollars to better align its capital usage to the main currency in which its risks originate.

It said the change has been approved by Swiss markets supervisor FINMA and will be enacted in the final quarter of this year.

“This is expected to result in an increase in the group’s annual net interest income, with an initial contribution expected in the fourth quarter of 2019,” Credit Suisse said in a statement.

“The increase in net interest income will be hedged over at least a two-year period,” the bank said. “Based on this hedging strategy and current market-implied forward rates, the increase is estimated at approximately $250 million on a full-year basis, equivalent to an RoTE benefit in 2020 of approximately 50 basis points.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.