Credit Suisse will post a second-quarter loss as the investment bank is being buffeted by difficult market conditions.

A range of headwinds are hit Credit Suisse during the first two months of the quarter which have affected the financial performance of its investment banking division and «are likely to lead to a loss for this division as well as a loss for the Group» for the second quarter of this year, the bank said in a statement Wednesday.

Credit Suisse cites geopolitical tensions, the unwinding of Covid stimulus measures, and significant monetary tightening by central banks resulting in heightened market volatility have reduced customer flows and led to «ongoing client deleveraging,», particularly in the APAC region.

While advisory revenues have been resilient and GTS revenues have benefited from the higher volatility compared to last year, the impact of these conditions, together with continued low levels of capital markets issuance and the widening in credit spreads «have depressed the financial performance» of the investment banking division.

In addition, reported earnings will be impacted by the bank's 8.6 percent stake in Allfunds Group whose value is being affected by volatility in the market value.

Transition Continuing

Credit Suisse will accelerate its cost-saving initiatives, aiming to maximize them from next year onwards. More details will follow at an investor event on June 28. The lender said it will continue to focus on its strategy to deliver on fixing regulatory issues and putting risk management at the core of the bank's operations.

Capital Ratio

For the time being, the bank plans to operate with a common equity tier1 (CET1) ratio of «around» 13.5 percent with a target of reaching 14 percent in 2024.

The statement made no mention of CEO Thomas Gottstein who has recently been the subject of speculation that he is on his way out because of the handling of myriad scandals plaguing the banks. At the same time, he has gotten the full support of Credit Suisse Chairman Axel Lehmann. 

Adding to the headaches was a report published in the «Financial Times» (behind paywall) yesterday, that Credit Suisse was among a group of creditors pushing the Israeli firm NSO to continue to sell its Pegasus spyware even after it was blacklised by U.S. authorities.