Credit Suisse on Tuesday reported a second-quarter loss of $779 million — its largest loss since the financial crisis — as it felt the impact of the settlement of a tax evasion case in the United States.
The Swiss bank, which has a large investment banking presence in New York, also said it would exit the commodities business, where it was not a significant player, and continue to restructure parts of its foreign exchange and rates businesses.The loss of 700 million Swiss francs for the quarter largely reflected a charge of 1.6 billion francs related to the settlement with federal and state authorities in the United States. In May,Credit Suisse agreed to plead guilty to one count of conspiring to aid tax evasion in helping Americans hide their money in Swiss accounts. The bank also agreed to pay about $2.6 billion in penalties.
The effect of the settlement could also be seen in the bank’s capital ratio, a measure of its financial strength, which fell to 9.5 percent in the second quarter from 10 percent in the first quarter. Brady W. Dougan, the bank’s American chief executive, said on Tuesday that he intended to get the ratio back to above 10 percent by the end of the year.
In the second quarter of 2013, Credit Suisse earned 1.05 billion francs.
The most recent results, however, did show some pockets of strength in investment banking.
“They did better on investment banking thanks to strong fixed income and a much stronger-than-expected June, but the three businesses that make up private banking and wealth management were weaker,” said Chris Wheeler, an analyst with Mediobanca.
Credit Suisse reported a loss of 749 million francs in its private banking and wealth management division, reflecting the tax evasion charge. The division is an area of strategic focus for the bank, and it posted pretax profit of 917 million francs in the period a year earlier.
The bank attracted 10.1 billion francs in net new money, an important figure that analysts will scrutinize to gauge clients’ response to the bank’s settlement. Mr. Dougan pointed to the inflows as evidence that many clients chose to do business with Credit Suisse.
That figure is down 26.3 percent from the first quarter and up nearly 33 percent from the second quarter of 2013.
Average assets under management in private banking and wealth management remained relatively unchanged at 1.31 billion francs, down 0.6 percent from the second quarter of 2013.
Results in its investment bank for the second quarter were mixed. The unit posted a pretax profit of 752 million, roughly flat from the period a year earlier.
Some analysts have been calling for a more comprehensive restructuring of the business, mimicking UBS, its largest home competitor. Some banks, such as UBS and Barclays, have or are sharply shrinking their fixed income businesses in response to weak results. Others, including Credit Suisse, Deutsche Bank andGoldman Sachs, are betting the market is in a cyclical downturn and will come back.
Fixed income sales and trading increased 4 percent, to 1.5 billion francs, thanks to investor demand for higher-yielding products in the credit and securitized product arena in response to continued low interest rates.
Over all, investment banking net revenue fell 2 percent, to 3.3 billion francs, but there were strong results in equity underwriting — up 30 percent. The bank reported that debt underwriting fell 10 percent and advisory work was off 4 percent. Compensation and net benefits, the most expensive cost item, rose 2 percent, to 1.5 billion francs.
In a conference call on Tuesday, Mr. Dougan fielded a number of questions about the fallout from the settlement. He reiterated that he deeply regretted the past misconduct and became irked when a reporter asked whether the bank should have acted more quickly to resolve the matter.
“It’s a common perception and it’s categorically not true,” he said.
He made clear that the bank’s many legal woes had been a primary focus for him and other senior management.
“There is no issue that has taken more of our time over the past five to six years,” he said.
An earlier version of this article made an erroneous comparison between Credit Suisse’s second-quarter results and those in the period a year earlier. The bank posted a second-quarter loss of 700 million Swiss francs and it earned 1.05 billion francs in the second quarter of 2013. That is a decrease of more than 160 percent, not 93 percent.