Credit Suisse has issued its third profit warning of the year and will accelerate cost-cutting measures, as the lender that has struggled to shake off a spate of recent crises undergoes a self-described transition year.
The Swiss bank said it would probably report a loss in the second quarter as its investment banking division was hit by market volatility from the war in Ukraine, the tapering of coronavirus pandemic stimulus measures and monetary tightening in response to rising global inflation.
It added that while income from advisory services had benefited from market volatility in the three months to the end of June, it had suffered from “weak customer flows and ongoing client deleveraging, notably in the [Asia-Pacific] region”.
The group’s investment banking division also struggled in April and May because of low equity and debt issuance and widening credit spreads as countries around the world tightened monetary policy at varying speeds.
“The main culprit is once again the investment bank, where Credit Suisse expects the fourth quarterly loss over the last six quarters,” said Vontobel analyst Andreas Venditti.
“As a consequence, Credit Suisse announces an acceleration of its cost [cutting] initiatives. Similarly to cost measures executed in the past, the consequence is likely to be a further erosion in staff morale and therefore another negative impact on revenues.”
In an interview with Bloomberg on Tuesday, Credit Suisse global head of investment banking and capital markets David Miller, said: “I’ve been using the entire first five months of this year running around seeing clients and telling them we are back.”
In January, Credit Suisse warned it would publish a loss for the final quarter of 2021 on the back of a slowdown in revenues in its investment bank. Three months later, it announced that it expected a first-quarter loss due to an increase in legal provisions.
The bank is due to publish its second-quarter results on July 27,…
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