After a deep red final quarter, the bottom line for the year as a whole was a deficit of 7.3 billion Swiss francs (7.4 billion euros), as the country’s second largest financial institution announced in Zurich on Thursday. In addition, customers withdrew money on a large scale in the fourth quarter after rumors that the bank was in trouble: the net outflow was 110.5 billion francs, and for the year as a whole it was even more than 123 billion. Nevertheless, shareholders are to receive a dividend of 5 centimes per share for 2022.
In the previous year, Credit Suisse (CS) suffered a loss of CHF 1.65 billion after the debacles surrounding the collapse of the Archegos hedge fund and the liquidation of the Greensill fund. In 2022, write-downs on deferred tax assets, the expensive restructuring of the group and the investment bank in the red had an impact on the result. Credit Suisse only suffered an even higher deficit than in 2022 in the middle of the financial crisis: in 2008 it posted a deficit of CHF 8.2 billion.
Credit Suisse under pressure after high outflow of client funds
Credit Suisse shares fell significantly on Thursday according to the figures. Weak results had been expected, but in certain areas they were even worse than feared. Above all, however, the high outflow of customer funds is not well received in analyst circles. The papers temporarily lose 5.07 percent to 3.087 francs.
“A weak fourth quarter ends a terrible year 2022,” said Bank Vontobel in a first comment on Credit Suisse. 2022 was clearly one of the worst years in the bank’s 167-year history. It has now reported losses in seven of the last nine quarters and the bank expects a “substantial” pre-tax loss for this year as well.
According to analyst comments, the loss in pre-tax earnings and net earnings is at first glance a little lower than feared. However, the quality of the figures is criticized because the result was weaker than expected both in the core business of wealth management and in investment banking.
Above all, however, the massive outflow of customer funds in the fourth quarter is very bad. Overall, customers withdrew well over 100 billion francs net, with most of it happening as early as October, when rumors were circulating on the Internet that the bank was in serious trouble. With client money being the bedrock of income, the outflow will continue to be negative.
The Zürcher Kantonalbank (ZKB) wrote that cost reductions are also of great importance, since earnings will probably continue to decline in 2023. Either way, the ongoing renovation will take even longer. According to Bank Vontobel, the year 2024 may bring a turnaround, albeit with probably still small profits.
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