A sign above the entrance to the headquarters of Credit Suisse Group AG in Zurich, Switzerland, on Monday, November 1, 2021.
Thi My Lien Nguyen Bloomberg | Getty Images
Credit Suisse said on Wednesday that it was likely to report a loss in the second quarter as the war in Ukraine and tightening monetary policy put pressure on its investment bank.
In a trade update early Wednesday morning, the struggling lender said the geopolitical situation, significant tightening of funds by major central banks in response to rising inflation and the release of stimulus measures from the Covid-19 era had caused “continued increased volatility market, weak customer flows and ongoing reduction in customer indebtedness, especially in the APAC region. “
Credit Suisse said that while trading revenues benefited from rising volatility, the impact of these conditions, combined with “continuing low levels of capital market issuance” and widening credit spreads, “lowered the investment bank’s financial performance” in April. and Maybe.
This “is likely to result in a loss for this unit, as well as a loss for the Group in the second quarter of 2022,” the trade update said.
Shares of the bank fell more than 5% shortly after the opening of markets on Wednesday.
Credit Suisse has suffered a series of scandals and accidents in recent years, prompting some shareholders to call for a change of leadership. However, chairman Axel Lehmann told CNBC in May that CEO Thomas Gotstein had his full support to continue the company’s “recovery”.
Gotstein took the reins in 2020 after the resignation of his predecessor Tijan Tiam due to a long spy scandal.
The bank reported a net loss for the first quarter of 2022 and announced a change in management as it continues to struggle with court costs related to the collapse of the hedge fund Archegos.
“We would like to point out that our reported profits will also be affected by the continuing volatility of the market value of our 8.6% investment in the Allfunds Group,” the bank added.
The Spanish wealthtech platform Allfunds Group, which launched at Euronext Amsterdam in April 2021, saw its share price fall by 52% since the beginning of the year.
Credit Suisse said 2022 will remain a year of “transition” for the bank, promising to accelerate cost-cutting across the group, and will provide further details to its investor Deep Dive on June 28.
The bank aims to manage a group tier 1 capital ratio, a measure of the bank’s solvency, of 13.5% in the short term, in line with its 14% target by 2024.
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