Credit Suisse warns of fourth-quarter loss on “massive” outflows

Credit Suisse Group AG warned it would post a loss of up to 1.5 billion Swiss francs ($1.6 billion) for the fourth quarter and reported further outflows of wealth management funds amid a slump in client confidence.

Hares was down 2.6 percent in early trade, falling below the record closing low set in late September

The Zurich-based bank said in a statement on Wednesday it expects losses at both its wealth management division and its investment banking unit due to muted activity, market conditions, ongoing outflows of client assets and the sale of non-core businesses.

The lender said net asset outflows as of Nov. 11 were about 6 percent of assets under management at the end of the third quarter. That equates to around 84 billion Swiss francs in outflows in wealth and wealth management.

Credit Suisse is undergoing a major overhaul that will split its investment bank and put a greater focus on private banking after years of scandals and management missteps. The company will seek shareholder approval later on Wednesday for a capital increase of around 4 billion Swiss francs and intends to reduce headcount by around 9,000 by 2025.

“The massive net outflows in wealth management, CS’s core business alongside the Swiss bank, are deeply worrying – all the more so since they have not yet reversed,” said Andreas Venditti, banking analyst at Bank Vontobel AG in Zurich. “Credit Suisse needs to restore confidence as soon as possible – but that’s easier said than done.”

Actual results will depend on “a number of factors,” including remaining performance for the remainder of the year, the continued exit from non-core positions, any goodwill impairment and the results of other asset sales, the bank said.

The bank warned last month that it was likely to report a loss for the fourth quarter, with chief executive Ulrich Körner saying the bank would “definitely” be profitable by 2024.

Lower deposits and reduced assets under management are likely to negatively impact the bank’s net interest income and recurring fees for the asset unit, it said.

Wealth management outflows “have declined significantly from the elevated levels of the first two weeks of October 2022, although they have not yet reversed, accounting for approximately 10 percent of assets under management at the end of the third quarter of 2022,” it said.

For the fourth quarter, the company also expects restructuring costs as well as impairments on software and real estate in the amount of 250 million Swiss francs. Credit Suisse warns of fourth-quarter loss on “massive” outflows

Fry Electronics Team

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