CS Stock Down 5%, Credit Suisse Says Profits for Q4 2021 Will Be Impacted by Litigation Charges

UTC by Steve Muchoki · 2 min read
CS Stock Down 5%, Credit Suisse Says Profits for Q4 2021 Will Be Impacted by Litigation Charges
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Credit Suisse noted that the hit will be partly offset by gains on real estate sales of approximately CHF 225 million.

Credit Suisse Group AG (NYSE: CS) stock closed Monday, January 24, 2022, trading at $9.24 after losing 4.55% from the day’s opening price. The losses extended during today’s premarket with approximately 5% lost as of 7:38 a.m EST. Credit Suisse, one of the world’s leading financial services providers, announced today that the reported profits for the fourth quarter of 2021 will be negatively impacted by litigation provisions of approximately CHF 500 million.

However, Credit Suisse noted that the hit will be partly offset by gains on real estate sales of approximately CHF 225 million. The bank is expected to release its 2021 full-year and fourth-quarter earnings results on Thursday, February 10, 2022.

The bank has been entangled with several cases including the Archegos Capital Management saga that saw a number of high ranking officials resign. Consequently, it is expected the sustained losses that materialized in 2021 to continue in the coming quarters.

“Before deduction of the already announced approximately CHF 1.6 billion goodwill impairment for the Group, of which approximately CHF 1.5 billion in the Investment Bank division and approximately CHF 0.1 billion in the Asia Pacific division, this is expected to result in a reported pre-tax income/(loss) for the Group of approximately breakeven for the fourth quarter 2021,” the bank noted.

The bank has since undertaken notable changes to mitigate future risks including reshuffle of top executives. Notably, the company’s Board of Directors recently appointed Axel P. Lehmann as the bank’s new Chairman. Lehmann succeeds António Horta-Osório, who resigned following an investigation commissioned by the Board.

Credit Suisse Stock and the Market Outlook

According to market analytics provided by MarketWatch, Credit Suisse stock has dropped approximately 31.50%, 4.15%, and 13.16% in the past year, YTD, and three months respectively. The bank has a reported market valuation of approximately $23.31 billion and 2.65 billion in shares outstanding.

Following the global coronavirus crisis among other macro economic developments, analysts are not sure of the bank’s future growth prospects. A study conducted by MarketWatch indicates 21 ratings gave CS shares an average of Hold rating.

The bank is expected to vote in Lehman as the next Chairman in the coming Annual General Meeting on April 29, 2022. He is expected to steer the company through the legal litigation.

“By executing our strategic plan in a timely and disciplined manner, without distraction, I am convinced that Credit Suisse will demonstrate the renewed strength and business focus needed to generate sustainable value for all of our stakeholders,” Lehmann said.

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Steve Muchoki

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