Credit Suisse posts fifth-straight quarterly loss of $1.5bn

Unprecedented client outflows resulted in a decline of about 20% in total assets under management last year

Credit Suisse's logo in Zurich. The lender's fixed-income trading revenue in the fourth quarter was down 84 per cent annually. Reuters

Credit Suisse Group posted a bigger-than-expected loss for the fourth quarter and unprecedented client outflows, exacerbating the difficulty chief executive Ulrich Koerner faces in returning the Swiss lender to profitability by next year.

Shares slid as much as 12 per cent on Thursday after Credit Suisse posted a fifth straight quarterly loss of 1.39 billion Swiss francs ($1.5 billion).

While outflows were concentrated in a hectic two-week period in October, their full scale — 110.5 billion francs — still surprised analysts.

Mr Koerner’s pledge to stem the decline hinges on a massive client outreach programme to woo nervous clients and their cash back to the bank, while carving out the volatile investment bank and slashing costs.

On Thursday, Credit Suisse reported progress in the steps needed to execute the plan, including the purchase of dealmaker Michael Klein’s boutique advisory firm, but only tentative signs that customer confidence is returning.

Mr Koerner expects the lender to be profitable 2024 and said 2023 would be “a transformative year, and then we get better and better”.

He detailed the bank’s efforts to win funds back, reaching out to tens of thousands of clients following the October surge, with management “hopeful that we bring a fair part of the outflow back in 2023 and the rest will come later”.

Credit Suisse’s total assets under management stood at 1.3 trillion Swiss francs at the end of 2022, a decline of about 20 per cent from a year earlier.

Chief financial officer Dixit Joshi said on Thursday that the wealth management unit had registered inflows in January, particularly in the Asia-Pacific region.

Mr Koerner said the bank was carrying out its restructuring plan “at pace”. Since the end of October, Credit Suisse has raised $4 billion in new capital and closed the sale of its securitised products group to Apollo Global Management, expecting to book a gain of $800 million in the first quarter.

Investment banking carve-out Credit Suisse First Boston is taking shape, with the absorption of Klein’s boutique firm in a deal valued at $210 million and an intention to publicly list or spin off the unit by the end of 2024.

And on costs, Credit Suisse has managed to cut 4 per cent of staff, inching towards the 17 per cent or 9,000 total job cuts they plan to make by 2025.

The structural cuts in the investment bank, coupled with an uncertain macroeconomic environment, partly drove results that trailed European and US peers by a long way.

Fixed-income trading revenue in the quarter was down 84 per cent annually while revenue from the equities trade collapsed 96 per cent.

Meanwhile, capital markets and advisory revenue was also down 59 per cent as a result of a slump in deal-making and an uncertain market environment, although that result was more in line with the competition.

In wealth management, the bank posted a loss before tax of 199 million francs, worse than estimates.

Recurring fees and net interest income were both down by 17 per cent while transaction revenue slumped 20 per cent due to marked-to-market losses for APAC financing of 31 million francs.

The continued losses underscore the urgency for chairman Axel Lehmann and Mr Koerner to put Credit Suisse on sustainable footing, with investors and analysts showing limited patience for execution of the revamp.

“With heavy losses to continue in 2023, we expect to see another wave of downgrades and see no reason to own the shares,” analysts at Keefe, Bruyette and Woods wrote in a note Thursday.