Credit Suisse is launching a comprehensive strategic review after posting its third straight quarterly loss, underscoring the Swiss firm’s challenges in returning to profitability.
The Zurich-based bank reported a net loss of SFr1.6 billion driven by a SFr1.2 billion loss at the investment bank and trading businesses as well as higher litigation expenses.
Revenues dropped 29% in both equity and fixed income sales and trading compared with the same period a year earlier. Net outflows topped SFR 7.7 billion as clients traded less and cut risk in response to volatile equity markets.
The loss was significantly higher than the analysts had predicted.
“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,” said Thomas Gottstein, chief executive of Credit Suisse Group.
He added, “The bank’s performance was significantly affected by a number of external factors, including geopolitical, macroeconomic and market headwinds. These challenging circumstances led to results which overshadow the strength of our leading client franchises in all four divisions of the bank.”
It is expected that part of the strategic review will see Gottstein being replaced by Ulrich Koerner, who was head of asset management.
“Since Mr Gottstein was appointed CEO in Feb 2020, Credit Suisse shares have declined by over 60%, materially underperforming peers.,” according to a Citigroup analyst note.
The review is also expected to focus on shrinking its investment bank and making significant cost cuts across a company that employs 45,000 people.
“Our goal must be to become a stronger, simpler and more efficient group with more sustainable returns,” said chair Axel Lehmann.
Overall, investment banking has not had a good quarter. UBS reported a drop in revenues by 14% while Goldman Sachs posted a drop of 41% and JP Morgan and Morgan Stanley lost 61% and 55%, respectively.
