Q3 2022 earnings and adjustments

Credit Suisse, Switzerland’s second largest bank, is seen here next to the Swiss flag in downtown Geneva.

Fabrice Gaffrini | AFP | Good pictures

Swiss debt As Jupiter posted a quarterly loss that was worse than analyst estimates, it announced a massive strategic shift.

The troubled lender posted a third-quarter net loss of 4.034 billion Swiss francs ($4.09 billion), compared with analyst expectations for a loss of 567.93 million Swiss francs. The figure was also very low 434 million The Swiss franc posted a profit in the same quarter last year.

The bank noted that the loss reflected a 3.655 billion Swiss franc impairment related to “the revaluation of deferred tax assets as a result of a comprehensive strategic review.”

Under pressure from investors, the bank unveiled a major overhaul of its business following underperformance in its investment bank and litigation costs that reduced revenue. New CEO Ulrich Koerner told CNBC on Thursday that it represented the start of a “transformation into a new Credit Suisse.”

In its widely anticipated strategic shift, the bank pledged to “radically restructure” its investment bank, significantly reducing its exposure to risk-weighted assets used to determine a bank’s capital requirements. It aims to reduce its cost base by 15% or 2.5 billion Swiss francs by 2025.

The bank expects to collect 2.9 billion Swiss francs in restructuring charges by the end of 2024.

The transformation plan will see Credit Suisse spin off its investment bank into an independent business called CS First Boston, raise 4 billion Swiss francs in capital through a new share and rights issue, and create a capital issuance unit. Returning, non-strategic businesses.

It aims to reduce risk-weighted assets and leverage exposure by 40% each during the restructuring, while the bank plans to “allocate nearly 80% of capital to wealth management, Swiss banking, asset management and markets by 2025.”

Speaking to CNBC, Koerner said the bank was “very stable, very profitable, very simple in how it was set up, and one of the most important things for us was how did we get to that solution? We started. We really designed everything around the customer’s needs and the customer’s needs, and we’re here today. We’re done proposing.”

Corner He took the helm in July following the resignation of predecessor Thomas Gottstein, after the bank posted a net loss of 1.593 billion Swiss francs in the second quarter, well below consensus expectations among analysts. He said Thursday’s strategic realignment represented a “very decisive action plan.”

“Number one, serious restructuring of the investment bank; number two, significant cost reductions; and number three, further strengthening our capital base, and with that, I think we have all the necessary ingredients to get where we want to go,” he added.

Credit Suisse has been hit over the past year by sluggish investment banking revenues, losses from divesting its business in Russia and litigation costs related to several legacy compliance and risk management failures. The Archigos hedge fund scandal.

Here are some other financial highlights for the third quarter:

  • Group revenue reached 3.804 billion Swiss francs, compared to 5.437 billion Swiss francs in the same period last year.
  • The CET1 capital ratio, a measure of bank solvency, was 12.6%, up from 14.4% at the same time last year and 13.5% in the previous quarter.
  • Return on tangible equity was -38.3%, down from -15% in the second quarter and 4.5% in the third quarter of 2021.

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