Credit Suisse Expects to End Q4 with a Loss of $1.58B

On Wednesday, Credit Suisse (SWX: CSGN) revealed its expectation of a pre-tax loss of up to 1.5 billion Swiss francs ($1.58 billion) for the fourth quarter of the ongoing fiscal year. Earlier, the Swiss banking giant said it was expecting a net loss but did not mention any figures.

The Swiss financial services giant is now preparing for a massive strategic overhaul and is seeking shareholders' permission for a $4 billion equity hike.

"These decisive measures are expected to result in a radical restructuring of the Investment Bank, an accelerated cost transformation, and strengthened and reallocated capital, each of which are progressing at pace," the bank stated in its Wednesday update.

The impact of the projected losses can already be seen in the publicly listed stocks of the bank. Credit Suisse stocks dropped by more than 6 percent, as of press time, since the markets opened on Wednesday.

Continued Losses

The latest regressive figures of the Swiss bank came after two consecutive quarters of massive losses: it posted a pre-tax loss of 342 million Swiss francs in the third quarter and 1.59 billion Swiss francs ($1.6 billion) in losses in Q2. The bank even appointed Ulrich Körner as the new CEO, replacing Thomas Gottstein.

The bank suffered heavily from constant high litigation costs following several scandals. In addition, it took a $5.5 billion loss from the US investment firm Archegos and had to freeze $10 billion worth of supply chain finance funds linked to Greensill.

The banking giant even highlighted the ongoing macroeconomic challenges affecting its client activities. On top of that, it is expecting subdued client activity in the wealth management division in the coming months.

"The Investment Bank has been impacted by the substantial industry-wide slowdown in capital markets and reduced activity in the Sales & Trading businesses, exacerbating normal seasonal declines, and the Group's relative underperformance," Credit Suisse stated.

Now, the banking giant is focusing on cost-cutting. It aims to reduce 15 percent of its operational costs by 2025 and cut about 1.2 billion Swiss francs of its expenses by the end of 2023.

"The Group continues to execute on the decisive strategic actions detailed on October 27, 2022, to create a simpler, more focused and more stable bank," Credit Suisse added.