Credit Suisse Reports CHF 7.3 Billion Annual Loss in 2022

Thursday, 09/02/2023 | 11:03 GMT by Damian Chmiel
  • The banking giant lost 20% of its assets under management.
  • The CEO confirms that current results are “unacceptable.”
Credit Suisse
Credit Suisse

Credit Suisse (NYSE:CS), a Swiss banking giant, reported a massive annual loss on Thursday that missed analyst expectations. According to the financial statement, Credit Suisse lost CHF 7.3 billion in 2022 compared to CHF 6.53 forecasted by industry experts.

Credit Suisse Reports Worse than Expected Financial Results

The fourth quarter results fell short of projections and were a nail in the lender's coffin. The net loss amounted to CHF 1.4 billion, CHF 800 million higher than was forecasted. In contrast, the bank at the end of November predicted that the loss for the last quarter could reach CHF 1.5 billion. "We have a clear plan to create a new Credit Suisse and intend to continue to deliver on our three-year strategic transformation by reshaping our portfolio, reallocating capital, right-sizing our cost base, and building on our leading franchises," Ulrich Körner, the Chief Executive Officer of Credit Suisse Group AG, commented in the financial statement.

It is the bank's fifth consecutive quarter of losses, and the report caused the bank's shares to slide 10% on Thursday. The problems faced by the lender resulted in a total of CHF 110.5 billion of capital outflow in 2022. Total assets under management amounted to CHF 1.3 trillion at the end of the year, falling 20% from a year earlier.

Körner admitted in interviews with CNBC and Bloomberg that such results are "unacceptable" and that by "2024 I think we should be profitable."

Ongoing Restructuration in Credit Suisse

The bank reported an even bigger loss of CHF 3.8 billion in the third quarter of 2022, mentioning the need for a "radical restructuring." As part of it, the lender planned to raise $4 billion of fresh capital, lay off 9,000 people and carve out CS First Boston as an independent investment organization in the US. The job cuts started in January when Credit Suisse went after the European investment bankers.

"From today, we are taking a series of decisive actions to re-focus Credit Suisse around the needs of our clients and stakeholders," Körner promised in October.

Two weeks later, the company confirmed that it intended to raise CHF 1.86 billion from new investors and CHF 2.24 billion from existing shareholders. This is the bank's third attempt to recover from its predicament and to defuse the controversy hanging over it.

For Credit Suisse, this is the most prominent image crisis in its 166-year history. A series of recent scandals have severely damaged its reputation, including a $5.5 billion loss in the collapse of Archegos and settlements of $495 million imposed in the US and $234 million in France.

Watch the recent FMLS22 panel on regulation trends in 2023.

Credit Suisse Acquires The Klien Group

On a positive note, Credit Suisse has managed to move forward with plans to spin off its investment bank to create independent US operations, CS First Boston. In a separate press release, the bank said it had completed the acquisition of The Klein Group for $175 million.

"We are very pleased to announce the planned addition of Michael Klein to our Executive Board through the acquisition of The Klein Group. Michael's experience and leadership will further strengthen our Executive Board and will help create shareholder value through this key strategic step of creating CS First Boston as an independent global capital markets and competitive advisory led business," Axel P. Lehmann, the Chairman of the Board of Directors of Credit Suisse, commented.

Michael Klein will assume the position of CEO of Banking and CEO of the Americas and will become CEO of CS First Boston. He joins the Supervisory Board and reports directly to the CEO of the entire Group, Ulrich Körner.

Credit Suisse (NYSE:CS), a Swiss banking giant, reported a massive annual loss on Thursday that missed analyst expectations. According to the financial statement, Credit Suisse lost CHF 7.3 billion in 2022 compared to CHF 6.53 forecasted by industry experts.

Credit Suisse Reports Worse than Expected Financial Results

The fourth quarter results fell short of projections and were a nail in the lender's coffin. The net loss amounted to CHF 1.4 billion, CHF 800 million higher than was forecasted. In contrast, the bank at the end of November predicted that the loss for the last quarter could reach CHF 1.5 billion. "We have a clear plan to create a new Credit Suisse and intend to continue to deliver on our three-year strategic transformation by reshaping our portfolio, reallocating capital, right-sizing our cost base, and building on our leading franchises," Ulrich Körner, the Chief Executive Officer of Credit Suisse Group AG, commented in the financial statement.

It is the bank's fifth consecutive quarter of losses, and the report caused the bank's shares to slide 10% on Thursday. The problems faced by the lender resulted in a total of CHF 110.5 billion of capital outflow in 2022. Total assets under management amounted to CHF 1.3 trillion at the end of the year, falling 20% from a year earlier.

Körner admitted in interviews with CNBC and Bloomberg that such results are "unacceptable" and that by "2024 I think we should be profitable."

Ongoing Restructuration in Credit Suisse

The bank reported an even bigger loss of CHF 3.8 billion in the third quarter of 2022, mentioning the need for a "radical restructuring." As part of it, the lender planned to raise $4 billion of fresh capital, lay off 9,000 people and carve out CS First Boston as an independent investment organization in the US. The job cuts started in January when Credit Suisse went after the European investment bankers.

"From today, we are taking a series of decisive actions to re-focus Credit Suisse around the needs of our clients and stakeholders," Körner promised in October.

Two weeks later, the company confirmed that it intended to raise CHF 1.86 billion from new investors and CHF 2.24 billion from existing shareholders. This is the bank's third attempt to recover from its predicament and to defuse the controversy hanging over it.

For Credit Suisse, this is the most prominent image crisis in its 166-year history. A series of recent scandals have severely damaged its reputation, including a $5.5 billion loss in the collapse of Archegos and settlements of $495 million imposed in the US and $234 million in France.

Watch the recent FMLS22 panel on regulation trends in 2023.

Credit Suisse Acquires The Klien Group

On a positive note, Credit Suisse has managed to move forward with plans to spin off its investment bank to create independent US operations, CS First Boston. In a separate press release, the bank said it had completed the acquisition of The Klein Group for $175 million.

"We are very pleased to announce the planned addition of Michael Klein to our Executive Board through the acquisition of The Klein Group. Michael's experience and leadership will further strengthen our Executive Board and will help create shareholder value through this key strategic step of creating CS First Boston as an independent global capital markets and competitive advisory led business," Axel P. Lehmann, the Chairman of the Board of Directors of Credit Suisse, commented.

Michael Klein will assume the position of CEO of Banking and CEO of the Americas and will become CEO of CS First Boston. He joins the Supervisory Board and reports directly to the CEO of the entire Group, Ulrich Körner.

About the Author: Damian Chmiel
Damian Chmiel
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About the Author: Damian Chmiel
Damian's adventure with financial markets began at the Cracow University of Economics, where he obtained his MA in finance and accounting. Starting from the retail trader perspective, he collaborated with brokerage houses and financial portals in Poland as an independent editor and content manager. His adventure with Finance Magnates began in 2016, where he is working as a business intelligence analyst.
  • 1520 Articles
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