The big bank has to set aside half a billion francs for legal disputes. This is reflected in a pre-tax loss of CHF 1.6 billion in the final quarter of 2021. But something else is cause for concern: the slowdown in the core business.
Perhaps one secretly hoped on Paradeplatz that the news would be lost in the hype surrounding the Raiffeisen trial: Credit Suisse (CS) announced on Tuesday that it had to make provisions for legal disputes amounting to CHF 500 million. These were related to transactions in the investment banking unit.
CS can partially compensate for this with extraordinary income from real estate sales. However, since the bank, as announced in November, is carrying out a goodwill impairment of 1.6 billion francs, it will have to report a loss in the billions in the final quarter of 2021.
“Coming to rest looks different,” the analyst at Zürcher Kantonalbank (ZKB) wanted to write about his research update on CS. The ZKB expert quipped that he had already used this title a week ago when the big bank announced the forced resignation of President António Horta-Osório.
Even if the renewed profit warning due to legal disputes could shock, something else gives cause for concern: the slowdown in day-to-day business. CS reports that transaction-based revenues declined in the fourth quarter of 2021 due to worsening market conditions. This affects both investment banking and asset management. The latter will hurt the bank and its shareholders. Because in wealth management, CS wants to look for growth and salvation in the future – as UBS has shown it.
The shares closed on Tuesday at CHF 8.20, 31 percent lower than twelve months ago. After the second-largest Swiss bank has mainly produced negative news in recent months, the verdict on the stock market is clear at the moment: Nobody is expecting major price jumps.