The logo of Swiss bank Credit Suisse is seen at its headquarters in Zurich, Switzerland March 24, 2021.
Arnd Wiegmann | Reuters
Credit Suisse on Thursday reported a fourth-quarter net loss of 1.4 billion Swiss francs ($1.51 billion), as it continued with its massive strategic overhaul.
The quarterly results were worse than analysts’ expectations for a net loss to shareholders of 1.32 billion Swiss francs and put the troubled Swiss lender’s full-year loss of 7, 3 billion Swiss francs.
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Credit Suisse predicts another “significant” loss for the full year in 2023 before turning a profit again in 2024.
Under pressure from investors, the bank in October announced a plan to simplify and transform its business in an effort to return to steady profitability after chronic underperformance. in investment banking and a series of risks and compliance errors.
Chief executive Ulrich Koerner said 2022 was a “critical year for Credit Suisse” and that the bank was “on track” to its strategic plan to create a “simpler, focused bank” more central”.
“We have successfully raised ~CHF4 billion in equity, accelerated the realization of our ambitious cost targets, and are making strong progress along the way,” Koerner said in a statement. radical restructuring of our Investment Bank.”
“We have a clear plan to create a new Credit Suisse and intend to continue our three-year strategic transformation by reshaping our portfolio, reallocating capital, adjusting scale the right cost base and build on our top franchises.”
In November, the The bank expects a loss of 1.5 billion Swiss francs for the fourth quarter amid large-scale restructuring costs, while Credit Suisse shareholders gave green light for $4.2 billion capital raise for the purpose of funding the overhaul.
The capital raise included the sale of a 9.9% stake in Credit Suisse to the National Bank of Saudi Arabia, making it its largest shareholder. The Qatar Investment Authority becomes second largest shareholder in Credit Suisse after doubling its stake late last year.
Reports of liquidity concerns led Credit Suisse to experience substantial withdrawals of assets under management by the end of 2022, but Koerner told CNBC at the World Economic Forum in January that the bank has seen a sharp drop in cash outflows and that that money is now returning to some areas of the business.
Even so, net outflows reached 110.5 billion Swiss francs in the fourth quarter, bringing annual asset outflows for 2022 to 123.2 billion Swiss francs, compared with 30.9 billion inflows in 2021. .
The bank’s wealth management division alone saw $95.7 billion in net asset outflows in 2022, with a heavy focus on the fourth quarter.
Credit Suisse revealed that about two-thirds of the larger net asset inflows were withdrawn in the October quarter and “decreased significantly for the remainder of the quarter”.
Koerner told CNBC on Thursday that the entire outcome is “completely unacceptable,” but stressed the need for a multi-year transition program.
He also emphasized that 60% of the total outflows were in October. Since then, the bank has embarked on an outreach program, speaking to 10,000 global wealth management clients and 50,000 clients. products in Switzerland.
“That’s created tremendous momentum and I expect that momentum to stay with us through 2023 but you can see that if you look at January,” Koerner told CNBC’s Geoff Cutmore.
“This group is net positive for deposits, wealth management globally is net positive for deposits, Asia Pac is net positive for deposits, Asia Pacific is positive for new net assets and Switzerland is also positive for new net worth, so I think if you look at that situation we’ve been in since January, I can say the situation has completely changed,” Koerner said.
He also expressed confidence that the “huge” customer loyalty and outreach program will help the bank maintain and build on returning capital.
In its report, the bank said its results were “significantly influenced by the challenging macroeconomic and geopolitical environment with market uncertainty and client risk aversion. “
“This environment has had an adverse impact on customer operations across all of our divisions. While we expect these market conditions to continue in the coming months, we have implemented comprehensive measures to further enhance customer engagement, deposit return as well as AuM and improve cost efficiency,” the bank said.
Other highlights from Thursday’s earnings:
- The CET 1 (tier one common equity) ratio, a measure of a bank’s solvency, came in at 14.1% from 14.4% a year ago.
- Net sales for the fourth quarter came in at 3.06 billion Swiss francs, from 4.58 billion Swiss francs a year earlier.
- Total operating expenses for the fourth quarter were 4.33 billion Swiss francs, compared with 6.27 billion a year ago.
Credit Suisse’s restructuring plans include the sale of part of the bank’s securitization product group (SPG) to US investment firms PIMCO and Apollo Global Management, as well as downsizing the bank. its struggling investments through the separation of its advisory and capital markets divisions. , will be renamed CS First Boston.
Credit Suisse shares are up nearly 17% since the start of the year.
The plan to phase out investment banking to establish CS First Boston with headquarters in the US got underway in the fourth quarter. Credit Suisse on Thursday announced that it has acquired Klein Corporation for $175 million.
The bank also confirmed the appointment of Michael Klein as CEO of the bank and Americas, as well as the Designated CEO of CS First Boston.
