June 25, 2022

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Credit Suisse issues a profit warning for the second quarter

Credit Suisse issues a profit warning for the second quarter

A sign above the entrance to the headquarters of Credit Suisse Group AG in Zurich, Switzerland, Monday, November 1, 2021.

Thi My Lin Nguyen | Bloomberg | Getty Images

Credit Suisse It said on Wednesday it was likely to incur a loss for the second quarter as the war in Ukraine and tightening monetary policy put pressure on the investment bank.

In an update to trading early Wednesday morning, the embattled lender said the geopolitical situation, significant monetary tightening from major central banks in response to rising inflation, and the dismantling of Covid-19 stimulus measures were causing “continued increased market volatility, weak customer flows and the continued reduction of indebtedness to clients, particularly in the Asia Pacific region.”

Credit Suisse said that despite trading returns benefiting from a sudden rise in volatility, the impact of these conditions, along with “persistent low levels of capital market issuance” and widening credit spreads, “caused a decline in the investment bank’s financial performance” in April and mayo.

This “is likely to result in a loss for this division as well as a loss for the group in the second quarter of 2022,” the trading update said.

The bank’s shares fell more than 5% shortly after markets opened on Wednesday.

Credit Suisse has been plagued by a series of scandals and mishaps in recent years, leading some shareholders to demand a change in leadership. Chairman Axel Lehmann told CNBC in MayHowever, that CEO Thomas Gotstein has his full support to continue to “rebuild” the company.

Gottstein took over in 2020 after Resignation of predecessor Tijan Thiam On a protracted spy scandal.

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The Bank reported a net loss for the first quarter of 2022 and announced a management adjustment as it continues to address litigation costs related to The collapse of the hedge fund Archegos.

“We note that our reported earnings will also be affected by the 8.6% continued volatility in the market value of our investment in Allfunds groupThe bank added.

Spanish wealth tech platform Allfunds, which launched at Euronext Amsterdam in April 2021, has seen its share price drop 52% ​​year-to-date.

Credit Suisse said 2022 will remain a “transitional” year for the bank, vowing to accelerate cost-cutting across the group, and will provide more details in investor “Deep Dive” on June 28.

The bank aims to operate a Tier 1 collective capital ratio, a measure of a bank’s solvency, at 13.5% in the near term, in line with its target of 14% by 2024.