Credit Suisse Group AG notched up its fifth-straight quarterly loss in the last three months of 2022, missing expectations after clients pulled billions in deposits from its wealth-management business, and flagged a further full-year loss in 2023.
The Swiss lender CSGN,
A company-compiled consensus forecast had expected a net loss of CHF1.34 billion on revenue of CHF3.15 billion.
At the same time, the bank acquired banker Michael Klein’s New York-based Klein & Co. operation for $175 million, with the expectation to fully integrate it into Credit Suisse’s new investment-banking business CS First Boston.
The acquisition lays the groundwork for a carve out of CS First Boston, and an eventual listing, Chief Financial Officer Dixit Joshi said in a media call.
It also said a deal with Apollo Global Management Inc. for the sale of a large part of its securitized-products business, which packages and resells debt, is expected to close in the first half of 2023 for a pretax gain of around $800 million.
It comes as Switzerland’s second-largest lender is in the process of a extensive restructuring, its latest attempt to right the ship after a series of costly scandals, aiming to cut 9,000 jobs and reduce the group’s cost base by 15% by 2025.
As part of its restructuring, its expects related expenses of around CHF1.6 billion in 2023 and about CHF1.0 billion in 2024, with the aim of cutting its cost base by close to CHF1.2 billion this year.
It led Credit Suisse to anticipate a substantial loss before taxes in 2023, also based on a challenging market environment, adding that it expects its investment bank to report a loss in the year.
The company already in November flagged expectations of a CHF1.5 billion pretax loss in the last quarter of 2022, after lower deposits and assets under management led to reduced net interest income and recurring commissions and fees, dragging its wealth-management business into a loss. In the end, the quarterly pretax loss came to CHF1.32 billion.
It came after the Zurich-based company experienced deposit and net-asset outflows in October as social-media reports and a spike in credit-default swaps caused a frenzy over the bank’s financial position.
Assets under management fell 8% compared with the amount of the end of September, mostly at its wealth-management division, to CHF1.294 trillion, due to the outflows as well as adverse foreign-exchange impacts, partly offset by favorable market movements, the bank said.
Group net asset outflows in the quarter were CHF110.5 billion, compared with inflows of CHF1.6 billion in 4Q 2021.
However, Chief Executive Ulrich Koerner has since said outflows have reversed.
Meanwhile, revenue slid 74% at its investment bank and 17% at wealth management.
Despite the loss, the company declared a dividend of CHF0.05 a share for 2022. Its common equity Tier 1 ratio, a measure of financial strength, was ahead of expectations at the end of December, at 14.1%, up 1.5 percentage points quarter on quarter.
The latest loss comes at the end of what Mr. Koerner called a crucial year for the bank, as it seeks to move on from heavy losses over funds linked to the collapse of the Archegos family office and financing firm Greensill Capital.
“We have a clear plan to create a new Credit Suisse and intend to continue to deliver on our three-year strategic transformation by reshaping our portfolio, reallocating capital, right-sizing our cost base, and building on our leading franchises,” Mr. Koerner said.
Write to Ed Frankl at firstname.lastname@example.org