Credit Suisse issues profit warning for second quarter

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

Thi My Lien Nguyen | Bloomberg | Getty Images

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

In a trade update early Wednesday morning, the controversial lender said the geopolitical situation, significant monetary tightening by major central banks in response to rising inflation and the unwinding of Covid-19-era stimulus measures “continued increased market volatility, weak customer flows.” had caused”. and ongoing customer deleveraging, particularly in the APAC region.”

Credit Suisse said that despite trading revenues benefiting from the spike in volatility, the impact of these conditions, coupled with “persistent low levels of capital market issuance” and widening credit spreads, “affected the investment bank’s financial performance” in April and May.

This will “probably lead to a loss for this division and a loss for the Group in the second quarter of 2022,” the trading update said.

Shares of the bank fell more than 5% shortly after markets opened on Wednesday.

Credit Suisse has endured a series of scandals and accidents in recent years, leading some shareholders to call for a change in leadership. However, chairman Axel Lehmann told CNBC in May that CEO Thomas Gottstein has his full support for continuing the “rebuild” of the company.

Gottstein took charge in 2020 after the resignation of predecessor Tidjane Thiam due to a lengthy espionage scandal.

The bank reported a net loss for the first quarter of 2022 and announced a management reshuffle as it continues to grapple with litigation costs related to the collapse of the Archegos hedge fund.

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

Spanish asset technology platform Allfunds Group, which launched on Euronext Amsterdam in April 2021, has seen its share price fall by 52% to date.

Credit Suisse said 2022 will remain a year of “transition” for the bank, promising to accelerate cost cutting across the group, and will provide more details on June 28 during its “Deep Dive” for investors.

The bank aims for a group common equity tier 1 capital ratio, a measure of bank solvency, of 13.5% in the short term, in line with its target of 14% by 2024.

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