Credit Suisse on Thursday reported a fourth-quarter and annual internet loss that missed expectations, as the Swiss financial institution continued with its big strategic overhaul.
The lender’s fourth-quarter internet loss attributable to shareholders got here in at 1.Four billion Swiss francs ($1.51 billion), worse than analyst projections of a loss 1.32 billion Swiss francs, in line with Eikon.
It took the embattled Swiss lender’s full-year loss to 7.Three billion Swiss francs, worse than the 6.53 billion Swiss franc loss expectation by analysts.
Credit Suisse is telegraphing one other “substantial” full-year loss in 2023 earlier than returning to profitability in 2024.
CEO Ulrich Koerner advised CNBC on Thursday that the complete results have been “completely unacceptable,” however underscored the necessity for the continuing multi-year transformation program.
Under stress from traders, the financial institution in October introduced a plan to simplify and remodel its enterprise in an effort to return to secure profitability following continual underperformance in its funding financial institution and a litany of risk and compliance failures.
Koerner in an announcement accompanying results that 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,” he mentioned within the assertion.
“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 prices, whereas Credit Suisse shareholders greenlit a $4.2 billion capital raise aimed toward financing the overhaul.
The capital increase included the sale of 9.9% of Credit Suisse shares to the Saudi National Bank, making it the financial institution’s largest shareholder. The Qatar Investment Authority became the second-largest shareholder in Credit Suisse after doubling its stake late final yr.
The emblem of Swiss financial institution Credit Suisse is seen at its headquarters in Zurich, Switzerland March 24, 2021.
Arnd Wiegmann | Reuters
Reports of liquidity issues led Credit Suisse to expertise vital outflows of property underneath administration in late 2022, however Koerner told CNBC at the World Economic Forum in January that the financial institution had seen a pointy discount in outflows, and that cash was now coming again to some areas of the enterprise.
Despite this, internet outflows hit 110.5 billion Swiss francs within the fourth quarter, taking the annual asset outflows for 2022 to 123.2 billion Swiss francs, in comparison with 30.9 billion inflows for 2021.
The financial institution’s wealth administration division alone noticed internet asset outflows of 95.7 billion in 2022, concentrated closely within the fourth quarter.
Credit Suisse revealed that round two thirds of the broader internet asset outflows within the quarter occurred in October, and “reduced substantially for the rest of the quarter.”
Koerner advised CNBC that 60% of the overall outflows got here in October. Since then, the financial institution has launched into an outreach program, chatting with 10,000 world wealth administration purchasers and 50,000 purchasers in Switzerland.
“That has created tremendous momentum, and I expect that momentum traveling with us throughout 2023 but you can see it if you look into January,” Koerner advised CNBC’s Geoff Cutmore.
“The group is net positive on deposits, wealth management globally net positive on deposits, Asia Pac net positive on deposits, Asia Pac positive on net new assets and also Switzerland positive on net new assets, so I think if you look at that situation which we experienced since January, I would say the situation has changed completely,” Koerner mentioned.
He additionally expressed confidence that the outreach program and “tremendous” ranges of consumer loyalty would assist the financial institution retain and construct on returning inflows.
In its report, the financial institution mentioned its results have been “significantly affected by the challenging macro and geopolitical environment with market uncertainty and client risk aversion.”
“This environment has had an adverse impact on client activity across all our divisions. While we would expect these market conditions to continue in the coming months, we have taken comprehensive measures to further increase our client engagement, regain deposits as well as AuM and improve cost efficiencies,” the financial institution mentioned.
Other highlights from Thursday’s earnings:
- CET 1 (widespread fairness tier one capital) ratio, a measure of financial institution solvency, reached 14.1% from 14.4% a yr in the past.
- Fourth-quarter internet revenues stood at 3.06 billion Swiss francs, from 4.58 billion Swiss francs a yr earlier.
- Total fourth-quarter working bills have been 4.33 billion Swiss francs, versus 6.27 billion a yr in the past.
Credit Suisse’s restructuring plans embrace the sale of a part of the financial institution’s securitized merchandise group (SPG) to U.S. funding homes PIMCO and Apollo Global Management, as effectively as a downsizing of its struggling funding financial institution by a spin-off of the capital markets and advisory unit, which shall be rebranded as CS First Boston.
Credit Suisse shares have gained virtually 17% for the reason that flip of the yr.
The deliberate carve-out of the funding financial institution to kind U.S.-headquartered CS First Boston moved forward within the fourth quarter. Credit Suisse on Thursday introduced that it had acquired The Klein Group for $175 million.
The financial institution additionally confirmed the appointment of Michael Klein as CEO of banking and the Americas, as effectively as CEO designate of CS First Boston.