Credit Suisse reported a CHF 1.6bn ($1.67bn) net loss for Q2 2022 compared to a net income of CHF 253mn ($263mn) in Q2 2021, its third consecutive quarter in the red. This was primarily a result of revenues declining 29% to CHF 3.6bn ($3.7bn). Breaking it down, Wealth Management revenues were down 34% YoY to CHF 1.3bn ($1.35bn) due to reduced client activity, in turn reducing commissions and fees. Investment Banking revenues also declined 43% YoY to $1.2bn, weighed down in particular by Capital Markets revenue which decreased 96% YoY. The loss was further compounded by loan loss provisions (Term of the Day, explained below) of CHF 64mn ($66.5mn) vs. an impairment releases of CHF 25mn ($26mn) one year prior. Additionally, operating expenses increased 10% YoY to CHF 4.8bn ($5bn), including major litigation provisions of CHF 434mn ($451mn) as the Swiss bank battles through a troubled period. On the balance sheet, Credit Suisse had net asset outflows of CHF 7.7bn ($8bn) this quarter vs. outflows of CHF 4.7bn ($4.9bn) last year, as clients withdrew their capital amid heightened market volatility. Notably, CEO Thomas Gottstein is stepping down, with Ulrich Korner set to succeed him. Before he left, Gottstein said, “Our results for the second quarter of 2022 are disappointing…we have now launched a broader cost efficiency and digital transformation program to reduce our absolute cost base to less than CHF 15.5bn in the medium term.” The bank’s CET1 ratio stands at 13.5% vs. 13.7% in Q2 2021.
Credit Suisse’s 5.25% perps callable in 2027 are trading lower at 80.5 cents to the dollar, down by 0.97 points to yield 10.81%.
