Credit Suisse (CS) has issued a second quarter profit warning, saying that it is likely to post a
loss as the war in Ukraine and higher interest rates hurt its investment banking unit.
The European lender said the geopolitical situation, significant monetary policy tightening from
major central banks, and the unwinding of pandemic stimulus measures have caused
“continued heightened market volatility, weak customer flows, and ongoing client deleveraging.”
Credit Suisse added that “continued low levels of capital markets issuance,” and widening credit
spreads, have “depressed the financial performance” of the investment bank in April and May.
This is “likely to lead to a loss for this division as well as a loss for the Group in the second
quarter of 2022,” the bank said.
The bank reported a net loss for the first quarter of this year and announced a management
reshuffle as it continues to grapple with litigation costs relating to the Archegos hedge fund
collapse.
Credit Suisse said that 2022 will remain a year of “transition” for the bank, vowing to accelerate
cost-cutting. The bank aims to operate a group common equity tier one capital ratio, a measure
of bank solvency, of 13.5% in the near-term, in line with its goal of 14% by 2024.
Credit Suisse shares fell more than 5% on news of the profit warning. Year to date, Credit
Suisse’s stock has declined 30% to $6.94 U.S. a share.
Related Stories
