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July 27, 2022

Credit Suisse posts $1.6bn loss in Q2; names new CEO

Credit Suisse has posted a net loss of $1.7bn (CHF1.593bn) in Q2 2022 against a profit of CHF253m a year ago, marking its third straight quarterly loss.

Revenues plummeted 29% to CHF3.6bn from CHF5.1bn in the same quarter of 2021.

Operating expenses climbed 10% year-on-year to CHF4.75bn and included major litigation provisions of CHF434m linked to the bank’s previously disclosed legal matters.

The bank posted a pre-tax loss of CHF1.2bn against a pre-tax income of CHF813m in the year-ago quarter.  

The group recorded net asset outflows of CHF7.7bn in Q2 2021, compared to net asset outflows of CHF4.7bn a year ago.

CET1 capital ratio stood at 13.5% as of the end of the quarter while CET1 leverage ratio, and Tier 1 leverage ratio remained flat at 4.3% and 6.1%, respectively.

Divisional highlights

The wealth management arm of Credit Suisse recorded pre-tax income of CHF114m on an adjusted basis, down 74% from previous quarter period. The bank attributed the decline to reduced client activity, lower volumes impacting revenues and higher costs.

The business reported net revenues of CHF1.3bn, a fall of 34% compared with the year ago period.

The unit’s assets under management (AuM) plummeted to CHF662bn from CHF769bn in Q2 2021 amid unfavourable markets movements and structural effects.

Credit Suisse’s investment arm posted a posted pre-tax loss of $860m, down from a pre-tax income of $663m in Q2 2021.

The division’s reported net revenues declined 43% year-on-year to $1.2bn. On adjusted basis, net revenues were down 55% year on year.

Asset management recorded an adjusted pre-tax income of CHF31m for Q2 2022, a decline of 75% year -on-year.

Leadership change

Credit Suisse Group CEO Thomas Gottstein is stepping down from his role following massive losses and plunge in revenue across the group.

Gottstein said that the bank’s performance was significantly affected by several external factors, including geopolitical, macroeconomic and market headwinds.

He commented: “Our results for the second quarter of 2022 are disappointing, especially in the Investment Bank, and were also impacted by higher litigation provisions and other adjusting items.

“These challenging circumstances led to results which overshadow the strength of our leading client franchises in all four divisions of the bank. The urgency for decisive action is clear and a comprehensive review to strengthen our pivot to the Wealth Management, Swiss Bank and Asset Management businesses, supported by a fundamental transformation of our Investment Bank, is underway.”

Gottstein will be replaced by Ulrich Koerner, who was formerly the CEO of the bank’s asset management division.

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