By
Chimamanda U. Martha
December 15th, 2023
The company’s third-quarter revenue came in at 3.804 billion Swiss francs, down from 5.437 billion Swiss francs for the same period last year.
Swiss multinational investment banking giant, Credit Suisse Group AG (SWX: CSGN) has posted a worse-than-expected loss for the third quarter as the company has continued to experience major slowdowns in its key business areas.
Against the expected loss of 567.93 million Swiss francs as projected by analysts, the company reported an actual net loss of 4.034 billion Swiss francs ($4.09 billion). When compared to the year-ago period, Credit Suisse Group recorded a profit of 434 million Swiss francs, making this current loss a more resounding one.
According to Credit Suisse, the recorded loss was aggravated by the 3.655 billion Swiss franc impairment that was incurred in relation to the “reassessment of deferred tax assets as a result of the comprehensive strategic review.” Here are other key highlights from the published performance report.
The company’s third-quarter revenue came in at 3.804 billion Swiss francs, down from 5.437 billion Swiss francs for the same period last year. The firm’s CET1 capital ratio, a measure of a bank’s insolvency came in at 12.6%, compared to 14.4% at the same time last year and 13.5% in the previous quarter.
Credit Suisse’s return on tangible equity plunged to -38.3%, a figure that is down from the -15% recorded in the previous quarter and 4.5% in the third quarter of 2021.
Credit Suisse to Curb its Loss with Full-Blown Reorganization
Credit Suisse Group’s new Chief Executive Officer (CEO, Ulrich Koerner is committed to radically restructuring the firm in a bid to foster the “transformation into a new Credit Suisse.”
Credit Suisse said it will split its investment banking outfit to form a new unit dubbed CS First Boston. As detailed, it will raise as much as 4 billion Swiss Francs in capital by issuing new shares and rights offerings to investors. In its reorganization plans, Credit Suisse said it will fast-track capital release to wind down lower-return, non-strategic businesses.
Speaking about the proposed reorganization, Koerner said the bank will be “much more stable, will be sustainably profitable, much simpler in how it is set up, and for us, one of the most important things was how did we come to that solution? We started actually with the client needs and we designed everything around the client needs and ended up with what we are proposing today.”
The restructuring will also come with some costs on the part of the bank as it is projected to incur as much as 2.9 billion Swiss francs by the end of 2024 but with the overall aim to bolster growth in the long term.
“Number one, a radical restructure of the investment bank; number two, a significant reduction of costs; and number three, a further strengthening of our capital base, and I think with that, we have all the necessary ingredients … to go where we want to go,” Koerner said.
The shares of Credit Suisse are down 6.87% on Thursday to 4.44 CHF.