Credit Suisse Group AG CS 0.81% reported a worse-than-expected fourth-quarter loss from fallen revenue and said 2022 will be a year of transition after punishing hits to its balance sheet and reputation.
The bank posted a net loss of 2 billion Swiss francs, equivalent to $2.16 billion, for the three months ending December. It had warned profits would be hit by legal costs and other charges. Net revenue for the quarter fell 12% year on year.
Credit Suisse has been reeling since twin disasters struck in March 2021 with the collapse of key clients Greensill Capital and Archegos Capital Management. Former Chairman António Horta-Osório had to resign in January for breaking coronavirus rules in England and Switzerland, after vowing to make the bank less risky and improve its culture.
Chief Executive Thomas Gottstein on Thursday said it “was a very challenging year.”
Credit Suisse combines a Wall Street investment bank with a wealth-management business that caters to the global rich. After last year’s disasters, the bank renewed its focus on the steadier wealth-management side of the operations.
In wealth management, clients took less risk in the quarter and there were fewer transactions in some divisions, Credit Suisse said. Net revenue dropped 26%.
Its investment bank had a $2.1 billion pretax loss in the fourth quarter. It took a 1.6 billion Swiss franc goodwill impairment charge for another write-down of Donaldson, Lufkin & Jenrette, the U.S. brokerage it bought two decades ago for $11.5 billion. It took a 3.8 billion Swiss franc charge in 2016. Credit Suisse had flagged the new charge in November.
Credit Suisse said net revenue fell in its investment bank too, by around 31%, from pulling back on risk and exiting prime services, the unit that lent to Archegos. It said its bonus pool is 32% lower than in 2020 to reflect the difficult year.
Profits across Wall Street fell last quarter. Banks had fared well during the pandemic, propelled by deal making and market volatility that fueled trading activity. Credit Suisse rode that wave, then lost more than $5 billion from the Archegos default in March 2021.
Write to Margot Patrick at [email protected]
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