Credit Suisse incurs net loss of CHF 4 billion in Q3 2022
Credit Suisse today posted a set of dismal results for the third quarter of 2022.
Credit Suisse reported a net loss attributable to shareholders of CHF 4.0 billion, compared to net income attributable to shareholders of CHF 434 million in the year-ago quarter. The reported net loss attributable to shareholders included an impairment of deferred tax assets related to Credit Suisse’s strategic review of CHF 3.7 billion.
Credit Suisse reported a pre-tax loss of CHF 342 million compared to pre-tax income of CHF 1.0 billion in 3Q21; this included CHF 178 million of major litigation provisions, primarily relating to legacy cases. The Group continues to take a proactive approach to reducing its litigation docket, including through the settlements of legacy cases, such as the French cross border matter and the New Jersey Attorney General RMBS case, for which it was fully provisioned.
In the third quarter of 2022, Credit Suisse saw net revenues decrease by 30% year on year, driven by a decline in IB net revenues, down 58%, on a USD basis.
The performance in the Investment Bank (IB) was weak, impacted by extremely challenging market conditions driven by higher volatility, widened credit spreads and muted primary issuance. As a result, Credit Suisse’s areas of core strength across trading as well as Investment Banking & Capital Markets were affected by the significant slowdown in capital markets activity and the cumulative impact of our de-risking.
Credit Suisse’s performance in Wealth Management (WM) was challenged due to lower client activity, AuM and recurring revenues. However, WM benefited from the improved rates environment leading to higher net interest income. Swiss Bank’s (SB) performance was resilient notwithstanding the adverse impact of the recent change in interest rates by the Swiss National Bank (SNB). Asset Management’s (AM) performance year on year was adversely impacted by continued market uncertainty.
In terms of outlook, Credit Suisse expects to record a CHF ~75 million loss in the final quarter of 2022. The loss is related to the full disposal of Credit Suisse’s shareholding in Allfunds Group plc, the impact of which should be more than offset by the related capital release, as part of the simplification of Credit Suisse.
Additionally, Credit Suisse would expect to incur restructuring charges, software and real estate impairments of CHF ~250 million in 4Q22 as part of the cost of the strategic transformation. Together with the adverse revenue impact from the exit from Credit Suisse’s non-core businesses and exposures, Credit Suisse would expect a net loss for the Group in 4Q22.