Credit Suisse reported further client outflows in the fourth quarter and a massive loss for the year. It also cut its already meager dividend.
Credit Suisse posted a net loss attributable to shareholders of 7.293 billion Swiss francs ($7.921 billion) in 2022, from a 1.65 billion franc loss the previous year. It was also unable to stem the outflow of client funds in the fourth quarter according to annual results released Thursday. The annual loss was roughly in-line with estimates for a 7.5 billion loss.
Clients Pull Money
Clients had started pulling substantial funds from the troubled lending in October, a trend that continued, according to the report. In the fourth quarter, Credit Suisse reported net outflows of 110.5 billion francs compared to 12.9 billion in the third quarter, bringing outflows to 123.2 billion for the year, a turnaround from 2021, when 30.9 million came into the bank. That included reclassifications of 17.6 billion francs related to the sanctions imposed in connection with Russia’s invasion of Ukraine.
Outflows in wealth management made up the bulk of the decline, with 95.7 billion attributed to the unit, of which 92.7 were in the fourth quarter.
«While the bank continues to take proactive actions to regain client inflows, lower deposits, and AuM are expected to lead to reduced net interest income and recurring commissions and fees,» which will likely lead to a loss in wealth management for the first quarter, Credit Suisse said.
Assets Under Management
Combined with outflows and a negative market environment, assets under management (AuM), important for generating fee income, fell 19.9 percent last year to 1.294 billion francs from 1.614 billion in 2021.
Overall AuM in wealth management fell nearly 30 percent to 540.5 billion francs last year from 742.6 billion in 2021, according to the report.
Restructuring Plans
Credit Suisse said the execution of its restructuring is ahead of schedule and laid out its plans for this year and next.
The priorities are to transform Credit Suisse into a firm centered around wealth management and its Swiss bank, complemented by asset management and markets.
It will continue to work towards carving out CS First Boston as an independent unit and accelerate its de-risking in its non-c0re unit.
Simplifying the bank is another goal along with exiting non-core businesses to become more efficient and continue to cut costs.
As previously reported, Credit Suisse seeks to reduce its cost base by around 15 percent, or about 2.5 billion Swiss francs, by 2025 and cut around 9,000 jobs in the process.
Dividend Cut
The bank also cut its dividend to five centimes from ten, subject to approval at its annual general meeting.
Common equity tier 1 ratio (CET1) decreased to 14.1 percent from 14.4 percent in 2021.
