Credit Suisse warned Wednesday it expected to report a loss for the second quarter on a hit from the investment banking division.
The Swiss bank said the investment banking segment’s depressed performance in April and May will cause a loss in the division and for Credit Suisse as a whole.
Credit Suisse said investment banking was hit by continued low levels of capital markets issuance and wider credit spreads. However, the bank noted the segment’s advisory revenue has been «resilient,» while global transaction services (GTS) revenue has benefited from higher volatility compared with last year’s performance.
Dreary Outlook
Overall, the bank was downbeat on the outlook.
«Market conditions so far in the second quarter of 2022 have remained challenging,» Credit Suisse said in a statement posted on its website.
«The combination of the current geopolitical situation following Russia’s invasion of Ukraine, significant monetary tightening by major central banks in response to the substantial increase in inflation and the unwind of Covid-related stimulus measures have resulted in continued heightened market volatility, weak customer flows and ongoing client deleveraging, notably in the APAC region,» the bank said.
The bank said its earnings would also be impacted by its 8.6 percent stake in Allfunds Group as volatility has impacted the market value of the holding.
Credit Suisse said it was accelerating its cost-cutting moves.
In May, Credit Suisse announced a pre-tax loss of 428 million Swiss francs (currently around US$439 million) for the first three months of the year, coming on top of a 1.7 billion francs loss in the fourth quarter. The bank was downgraded in May by Fitch Ratings, which cited Credit Suisse's weak operating profitability compared with its peers.
