A sign above the entrance to the Credit Suisse Group AG headquarters in Zurich, Switzerland, Monday, November 1, 2021.
Thi My Lien Nguyen | Bloomberg | Getty pictures
Credit Suisse said on Wednesday that it is likely to lead to a loss in the second quarter as the war in Ukraine and monetary policy put pressure on the investment bank.
In a trade update early Wednesday morning, the difficult lender said that the geopolitical situation, significant monetary tightening by major central banks in response to rising inflation, and the phasing out of the Covid-1[ads1]9 era stimulus measures had caused “continued increased market volatility, weak customer flows and ongoing customer lending. especially in the APAC region. “
Credit Suisse said that despite the trading income benefiting from the increase in volatility, the impact of these conditions, combined with “continued low levels of capital market issues” and increasing credit spreads, has “pushed the financial performance” of the investment bank in April and May.
This will “probably lead to a loss for this division as well as a loss for the group in the second quarter of 2022,” the trade update states.
The bank’s shares fell more than 5% shortly after the stock exchange opened on Wednesday.
Credit Suisse has undergone a number of scandals and accidents in recent years, which has led to some shareholders demanding a change of management. However, chairman Axel Lehmann told CNBC in May that CEO Thomas Gottstein has full support for continuing the “rebuilding” of the company.
Gottstein took control in 2020 after his predecessor Tidjane Thiam resigned due to a long-standing spy scandal.
The bank reported a net loss for the first quarter of 2022 and announced a reorganization of management as it continues to struggle with legal costs related to Archego’s hedge fund collapse.
“We will note that our reported earnings will also be affected by continued volatility in the market value of our 8.6% investment in Allfunds Group,” the bank added.
The Spanish wealth technology platform Allfunds Group, which was launched on Euronext Amsterdam in April 2021, has seen its share price plummet 52% so far this year.
Credit Suisse said that 2022 will remain a year of “transition” for the bank, promising to accelerate cost cuts across the group, and will provide further details to its investor “Deep Dive” on June 28.
The bank aims to operate a tier 1 capital adequacy ratio, a target for the bank’s solvency, of 13.5% in the short term, in line with the target of 14% by 2024.