Credit Suisse Q4 Loss Widens; Warns On FY22; Stock Down

(RTTNews) - Shares of Credit Suisse Group AG were losing around 5 percent in Swiss trading as well as in pre-market activity on the NYSE after the banking major reported Thursday a sharply wider net loss in its fourth quarter with charges and weak revenues, mainly in the Investment Bank.

The results were negatively impacted by the Archegos matter, the impairment of goodwill relating to the Donaldson, Lufkin & Jenrette or DLJ acquisition in 2000 and litigation provisions.

Looking ahead for fiscal 2022, the Swiss lender said the results would be adversely affected by restructuring costs and higher compensation costs compared to last year. Compared to the exceptional levels of first-quarter last year, there is a reversion to lower, pre-pandemic levels of business activity. Further, the reported results would reflect volatility in the share price of 8.6% holding in Allfunds Group.

The year 2022 will be a transition year as the benefits of strategic capital reallocation towards core businesses and generating structural costs savings to invest for growth should largely materialize from 2023 onwards.

Further, the bank said the Board of Directors will propose to the shareholders at the Annual General Meeting on April 29, 2022 a cash distribution of 0.10 Swiss franc per share for the financial year 2021.

For the fourth quarter, net loss attributable to shareholders was 2.01 billion Swiss francs, wider than prior year's loss of 353 million francs.

Pre-tax loss was 1.59 billion francs, compared to last year's loss of 88 million francs.

The latest results were hurt by a goodwill impairment of 1.6 billion francs taken in the Investment Bank and APAC, mainly relating to the acquisition of DLJ that was completed in 2000. Also, major litigation provisions of 436 million francs were included in the results. These were partly offset by real estate gains of 224 million francs.

Adjusted pre-tax income, excluding significant items and Archegos, fell 62 percent to 328 million francs from prior year's 861 million francs. The results reflected the recalibrated risk appetite across divisions in 2021 as well as lower client activity.

Total operating expenses grew 20 percent from last year to 6.19 billion francs.

Net revenues for the quarter declined 12 percent to 4.58 billion francs from 5.22 billion francs last year. Adjusted net revenues fell 18 percent to 4.38 billion francs.

Wealth Management-related revenues grew 2 percent from last year to 3.20 billion francs, but was offset by 31 percent drop in Investment back revenues to $1.61 billion.

Investment Bank revenues were hurt by the loss related to Archegos, the cumulative impact of the Group's reduced risk appetite in 2021 as well as its exit of Prime Services.

In Switzerland, Credit Suisse shares were trading at 8.79 francs, down 5 percent.

In pre-market activity on the NYSE, the shares were losing around 4.7 percent to trade at $9.54.