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Credit Suisse posts massive annual loss as ‘radical’ restructure gets underway

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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 continues with its huge strategic overhaul.

The quarterly result was worse than analyst projections of a net loss attributable to shareholders of 1.32 billion Swiss francs, and took the embattled Swiss lender’s full-year loss to 7.3 billion Swiss francs.

Under pressure from investors, Credit Suisse in October announced a plan to simplify and transform its business in an effort to return to stable profitability following chronic underperformance in its investment bank and a litany of risk and compliance failures.

CEO Ulrich Koerner said 2022 was a “crucial year for Credit Suisse” and that it had been “executing at pace” on its strategic plan to create a “simpler, more focused bank.”

“We successfully raised CHF ~4 billion in equity capital, accelerated the delivery of our ambitious cost targets, and are making strong progress on the radical restructuring of our Investment Bank,” Koerner said in a statement.

“We have a clear plan to create a new Credit Suisse and intend to continue to deliver on our three-year strategic transformation by reshaping our portfolio, reallocating capital, right-sizing our cost base, and building on our leading franchises.”

In November, the bank projected a 1.5 billion Swiss franc loss for the fourth quarter amid large-scale restructuring costs, while Credit Suisse shareholders greenlit a $4.2 billion capital raise aimed at financing the overhaul.

The capital raise included the sale of 9.9% of Credit Suisse shares to the Saudi National Bank, making it the bank’s largest shareholder. The Qatar Investment Authority became the second-largest shareholder in Credit Suisse after doubling its stake late last year.

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Reports of liquidity concerns led Credit Suisse to experience significant outflows of assets under management in late 2022, but Koerner told CNBC at the World Economic Forum in January that the bank had seen a sharp reduction in outflows, and that money was now coming back to some areas of the business.

Despite this, net outflows hit 110.5 billion Swiss francs in the fourth quarter, taking the annual asset outflows for 2022 to 123.2 billion Swiss francs, compared to 30.9 billion inflows for 2021.

The bank’s wealth management division saw net asset outflows of 95.7 billion in 2022, concentrated heavily in the fourth quarter.

Other highlights from Thursday’s earnings:

  • CET 1 (common equity tier one capital) ratio, a measure of bank solvency, reached 14.1% from 14.4% a year ago.
  • Fourth-quarter net revenues stood at 3.06 billion Swiss francs, from 4.58 billion Swiss francs a year earlier.
  • Total fourth-quarter operating expenses were 4.33 billion Swiss francs, versus 6.27 billion a year ago.
Credit Suisse making really good progress, says CEO

Credit Suisse’s restructuring plans include the sale of part of the bank’s securitized products group (SPG) to U.S. investment houses PIMCO and Apollo Global Management, as well as a downsizing of its struggling investment bank through a spin-off of the capital markets and advisory unit, which will be rebranded as CS First Boston.

Credit Suisse shares have gained almost 17% since the turn of the year.

The planned carve out of the investment bank to form U.S.-headquartered CS First Boston moved ahead in the fourth quarter, with the announcement that Credit Suisse had acquired The Klein Group for $175 million.

Credit Suisse also confirmed the appointment of Michael Klein as CEO of banking and the Americas, as well as CEO designate of CS First Boston.

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This is a breaking news story, please check back later for more.

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James Thomas
James Thomashttps://businessadvise.org
Hello, I am James Thomas blogger and content creator who specializes in personal finance and investing at Business Advise. I have been writing for over 5 years and have built a large following of readers who value practical advice and actionable tips. I'm committed to helping people take control of their financial futures and achieve their goals.

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