Credit Suisse suffers US$1.6b Q4 loss, cash exodus

CREDIT Suisse Group has warned that it will book a loss of up to 1.5 billion Swiss francs (S$2.2 billion) for the fourth quarter, and also reported further outflows of wealth management funds amid a slump in client confidence. 

The Zurich-based bank said on Wednesday (Nov 23) that it expects losses in both the wealth management division and its investment banking unit due to subdued activity, market conditions, continued outflows of customer assets and the sale of non-core businesses. 

The lender said that as at Nov 11, net asset outflows were about 6 per cent of the assets under management at the end of the third quarter. That is equivalent to approximately 84 billion Swiss francs in outflows across wealth and asset management. 

Credit Suisse is undergoing a sweeping overhaul that will see its investment bank carved up and greater focus being placed on private banking after years of scandals and management missteps. It will seek approval from shareholders later on Wednesday for a capital raise of about four billion francs, and intends to reduce headcount by about 9,000 by 2025. 

“The massive net outflows in wealth management, Credit Suisse’s core business alongside the Swiss Bank, are deeply concerning – even more so as they have not yet reversed,” said Andreas Venditti, banking analyst at Bank Vontobel in Zurich. “Credit Suisse needs to restore trust as fast as possible – but that is easier said than done.”

The actual results will depend on “a number of factors”, including remaining performance for the rest of the year, the continued exit of non-core positions, any goodwill impairments, and outcomes of other asset sales, the bank said.

It had warned last month that a loss for the fourth quarter was to be expected, with chief executive officer Ulrich Koerner saying that the bank will “definitely” be profitable from 2024. 

Lower deposits and reduced managed assets are expected to negatively impact the bank’s net interest income and recurring fees for the wealth unit, the bank said. 

Its outflows in wealth management “have reduced substantially from the elevated levels of the first two weeks of October 2022, although they have not yet reversed, and were approximately 10 per cent of assets under management at the end of the third quarter of 2022,” it said.

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The bank also expects to incur restructuring charges and software and real estate impairments of 250 million Swiss francs in the fourth quarter. BLOOMBERG