As Credit Suisse (NYSE:CS) executes on its Investment Bank restructuring and cost-cutting plan, its Q4 loss before taxes could amount to as much as ~CHF 1.5B ($1.6B), due to the costs incurred in carrying out the plan and asset outflows in recent weeks, the company said Wednesday.
“The Group’s actual results will depend on a number of factors including the Investment Bank’s performance for the remainder of the quarter, the continued exit of non-core positions, any goodwill impairments, and the outcome of certain other actions, including potential real estate sales,” it said.
The Swiss lender had previously disclosed that it began experiencing deposit and net asset outflows in the first two weeks of October at levels that “substantially exceeded the rates incurred in the third quarter of 2022.” As of Nov. 11, 2022, net asset outflows were ~6% of assets under management at the end of Q3 2022.
The Investment Bank has been hurt by the industry-wide slowdown in capital markets, reduced activity in sales and trading businesses, exacerbating normal seasonal declines, and the Group’s relative underperformance. Meanwhile, “client activity remains subdued in the Wealth Management and Swiss Bank divisions, and the bank expects these market conditions to continue in the coming months,” it added.
Credit Suisse (CS) outlined its massive restructuring plan on Oct. 27, including cutting its cost base by 15%, reducing headcount by 5%, selling most of its Securitized Products Group to Apollo Global Management, splitting its Investment Bank into three units, and raising CHF 4B of new capital.
The company’s American depositary shares slid 3.2% in U.S. premarket trading.
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