Credit Suisse announces complete overhaul following dire Q2 results

The bank has announced a new CEO and recovery plan following a 29% decline in net profits and a 43% drop in investment bank revenues for Q2.

With European banks releasing their Q2 results this week, Credit Suisse follows the trend of disappointing results from the quarter, which has seen investment banking revenues collapse on both sides of the bond.

Credit Suisse showed a net profit of CHF 3.6 billion, a decrease of 29% year-on-year, driven by a decline in investment bank net revenues which were down 43% on a US dollar basis.

Investment banking revenues have seen declines across Wall Street over the last quarter, most recently with UBS reporting a fall in revenues by 14%. Elsewhere, Goldman Sachs posted a drop in investment banking revenue of 41% earlier this month, while JP Morgan and Morgan Stanley lost 61% and 55%, respectively.  

Wealth management net revenues at Credit Suisse were down 34% year-on-year, with asset management net revenues following a similar trend, down 25%.

“Our results for the second quarter of 2022 are disappointing, especially in the Investment Bank, and were also impacted by higher litigation provisions and other adjusting items,” said Thomas Gottstein, chief executive of Credit Suisse Group.

“The bank’s performance was significantly affected by a number of external factors, including geopolitical, macroeconomic and market headwinds. These challenging circumstances led to results which overshadow the strength of our leading client franchises in all four divisions of the bank.”

Credit Suisse’s poor results this quarter were predicted by the bank earlier this year, attributing heightened market volatility, weak customer flows and ongoing client deleveraging as some of the causes for continued profit losses.

Fears exist that job losses could occur to cope with reduced profits and to reduce expenses. This follows Credit Suisse’s decision to all but exit prime services following the fallout from the collapse of Archegos Capital Management, which cost the Swiss-bank $5.5 billion and forced a wholesale review of risk management across the business, which has already resulted in job losses.

“The urgency for decisive action is clear and a comprehensive review to strengthen our pivot to the Wealth Management, Swiss Bank and Asset Management businesses, supported by a fundamental transformation of our Investment Bank, is underway,” added Gottstein.

To address growing concerns around the bank’s performance, Credit Suisse has announced an overhaul to help improve profitability within the company through scaling back investment banking and reducing overall costs.

As part of the overhaul, Ulrich Kòrner has been appointed as group chief executive officer from 1 August, replacing Thomas Gottstein who has announced his resignation.

Elsewhere, David Miller and Michael Ebert will become co-heads of Credit Suisse’s investment banking business, while current chief Christian Meissner will focus on strategic review.