Fitch adds insult to injury as it joins S&P in downgrading the troubled Swiss banking group.
Credit Suisse has been downgraded by Fitch Ratings, as weak operating profitability compared to its competitors highlights the risks the bank faces during a period of restructuring, according to a statement from the rating agency.
Both the bank's long-term issuer default and viability ratings were downgraded to BBB+ from A- and bbb+ from a-, respectively.
Challenges Ahead
In explaining the downgrade, Fitch said that «Credit Suisse's weak operating profitability compared with peers' highlights the execution risk during the group's restructuring in a difficult market environment and indicates the challenges for the bank to strengthen its performance over the next 24 months as well as for its risk governance».
Earlier this month, Credit Suisse announced a pre-tax loss of 428 million Swiss francs ($446 million) for the first three months of the year, coming on top of a 1.7 billion francs loss in the fourth quarter. The loss attributable to shareholders was 273 million francs, slightly worse than the 252 million francs loss in the first quarter of 2021, as finews.com reported.
Maneuvering Room
Still, Credit Suisse has leeway to improve, with Fitch rating the outlook as «stable», indicating the rating «has sufficient headroom to withstand a period of weaker profitability».
However, «failure to implement the group's strategic plan successfully would put pressure on Credit Suisse's core wealth-management and investment-banking franchises and indicate weaknesses in its business model», Fitch warned.
