About Us Press Release
Credit Suisse Group announces second quarter 2022 financial results
“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. 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. 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. Further, we have now launched a broader cost efficiency and digital transformation program to reduce our absolute cost base to less than CHF 15.5 bn in the medium term.
Today marks a leadership change for Credit Suisse. It has been an absolute privilege and honor to serve Credit Suisse over these past 23 years. It has been my passion since day one to deliver best-in-class service to our clients. As a leader, since joining the Executive Board in 2015, I was focused on delivering results and embracing our values, including partnership, accountability and integrity.”
Thomas Gottstein, Chief Executive Officer of Credit Suisse Group AG
Please refer to the additional media release published on July 27, 2022, concerning the management change and comprehensive strategic review.
Summary of 2Q22 performance
As stated in our Trading Update on June 8, 2022, the second quarter was marked by challenging economic and market conditions. The combination of the current geopolitical situation following Russia’s invasion of Ukraine and significant monetary tightening by major central banks in response to the substantial increase in inflation have resulted in continued heightened market volatility, weak customer flows and ongoing client deleveraging.
Our performance in the Investment Bank (IB) was impacted by significantly lower capital markets issuance activity as well as reduced client activity, partly offset by stronger M&A advisory revenues. The IB’s franchise positioning was not geared towards benefiting from the volatile market conditions and our areas of strength, such as capital markets, were significantly impacted.
Our performance in Wealth Management (WM) was strained due to lower client activity, volumes and recurring revenues. However, WM and Swiss Bank (SB) benefited from the improved rates environment leading to higher net interest income.
In 2Q22 we saw net revenues decrease by 29% year on year, driven by a decline in IB net revenues, down 43%, on a USD basis; a decline in WM net revenues, down 34%; as well as a decline in Asset Management (AM) net revenues, down 25%. We had a net revenue increase in SB, up 3% year on year. Reported net revenues included a valuation loss of CHF 168 mn from our equity investment in Allfunds Group. We had adjusted* net revenues of CHF 3.8 bn, down 27% year on year; these include mark-to-market losses of USD 245 mn in Leveraged Finance within the IB as a result of less favorable market conditions.
Reported operating expenses of CHF 4.8 bn were up 10% year on year and included major litigation provisions of CHF 434 mn, primarily relating to developments in a number of previously disclosed legal matters, including a matter concerning compliance with records preservation requirements relating to business communications sent over unapproved electronic messaging channels. Our adjusted* operating expenses of CHF 4.2 bn were up 5%, primarily driven by incremental investment spend.
We reported a pre-tax loss of CHF 1.2 bn compared to a pre-tax income of CHF 813 mn in 2Q21. Our adjusted* pre-tax loss for 2Q22 was CHF 442 mn, down significantly compared to 2Q21. We reported a net loss attributable to shareholders of CHF 1.6 bn, compared to net income attributable to shareholders of CHF 253 mn in 2Q21.
We had Group net asset outflows of CHF 7.7 bn in 2Q22, compared to net asset outflows of CHF 4.7 bn in 2Q21. Our global wealth management, which includes our WM division and Private Banking Switzerland, had moderate net asset outflows for 2Q22 of CHF 1.8 bn; this was driven primarily by net asset outflows in EMEA and Switzerland partially offset by net inflows across Asia Pacific and Americas. Group AuM for 2Q22, stood at CHF 1.5 trn, down from CHF 1.6 trn at the end of 1Q22.
We maintained a resilient capital base with our CET1 capital ratio at 13.5% as of the end of 2Q22, in line with our guidance. Our CET1 leverage ratio, and our Tier 1 leverage ratio remained flat at 4.3% and 6.1%, respectively, as of the end of 2Q22.
Summary of 1H22 performance
For the first half of 2022 we saw net revenues decrease by 36% year on year, driven by a decline in IB net revenues, down 48%, on a USD basis, and a decline in WM net revenues, down 39%. We also saw a decline in AM net revenues, down 18% year on year, whereas net revenues in SB were up 5% for 1H22. Our reported net revenues of CHF 8.1 bn included real estate gains of CHF 177 mn, partially offset by a valuation loss of CHF 521 mn related to our equity investment in Allfunds Group. We had adjusted* net revenues of CHF 8.4 bn, down 34% year on year. The bank’s performance was impacted by the ongoing macro-economic and geopolitical challenges and market headwinds.
We had reported operating expenses of CHF 9.7 bn, up 18% year on year, primarily driven by litigation provisions of CHF 1.1 bn. Our adjusted* operating expenses were CHF 8.4 bn, up 7%, driven by increased incremental investment spend of CHF 331 mn relating to our Group strategy, as well as increased remediation spend in Risk, Compliance and Infrastructure.
We reported a pre-tax loss of CHF 1.6 bn for 1H22, compared to a pre-tax income of CHF 56 mn for the same period in 2021. Our adjusted* pre-tax loss for the first half of 2022 was CHF 142 mn, which compares to an exceptionally strong adjusted* pre-tax income of CHF 4.9 bn in the first half of 2021.
Our Group NNA for 1H22 was CHF 0.2 bn, compared to CHF 23.7 bn for the same period in 2021.