ZURICH – Credit Suisse Group on Thursday reported its worst annual loss since the 2008 global financial crisis, hit hard by client withdrawals, and warned that a further “substantial” loss would come in 2023.
Battered by scandals, the Swiss bank saw a sharp acceleration in withdrawals in the fourth quarter, with outflows of 110.5 billion Swiss francs (S$159 billion), although it said the picture has been improving.
The wealth management division and investment banking unit will also probably be loss-making in the first quarter of 2023, it forecast.
Switzerland’s second-biggest bank posted a net loss of 1.39 billion francs in the fourth quarter, in line with expectations. The result compares with a loss of 2 billion francs in the same quarter a year earlier, and brings Credit Suisse’s total net loss in 2022 to 7.29 billion francs (S$10.5 billion), marking its second straight year in the red.
In its flagship wealth management division, Credit Suisse reported outflows of 92.7 billion francs, much higher than the 61.9 billion that analysts had expected and putting the new total for the division’s assets under management at 540.5 billion francs.
The haemorrhaging of funds in 2022 led it to breach some liquidity requirements.
The bank, however, completed a 4 billion Swiss franc fund raising in December, and deposits were “net positive” in January as the lender conducted an unprecedented outreach to clients, chief executive officer Ulrich Koerner said in a Bloomberg TV interview on Thursday.
Last year’s “results are unacceptable”, he said.
“It will take some time and we have said we will make a loss in 2023, but from then on, it will get better and better,” said Mr Koerner, adding that the bank should be profitable by 2024.
“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,” Mr Koerner said in a statement.
Credit Suisse is carving out parts of its investment bank and refocusing on its core wealth management business following a strategy revamp in October, after years of scandals and losses shattered confidence in the brand.
The bank is shedding as many as 9,000 jobs and has made significant cuts to its bonus pool.
It also made progress in plans to spin off its investment banking arm, announcing that it had bought former board member Michael Klein’s advisory boutique for US$175 million (S$231.5 million).
The bank has said it is seeking US$500 million from investors for Credit Suisse First Boston and Mr Koerner in October said the bank already had a US$500 million commitment from an investor, without naming the party.
Among a slew of scandals in recent years, Credit Suisse has been particularly hard hit by its US$5.5 billion loss on United States investment firm Archegos and the freezing of US$10 billion worth of supply chain finance funds linked to insolvent British financier Greensill. REUTERS, BLOOMBERG
