Credit Suisse points revenue warning for second quarter, citing Ukraine warfare and charge hikes

Credit Suisse mentioned on Wednesday that it’s prone to submit a loss for the second quarter because the warfare in Ukraine and financial coverage tightening squeeze its funding financial institution.

In a buying and selling replace early Wednesday morning, the embattled lender mentioned the geopolitical scenario, vital financial tightening from main central banks in response to hovering inflation, and the unwinding of Covid-19 period stimulus measures had precipitated “continued heightened market volatility, weak customer flows and ongoing client deleveraging, notably in the APAC region.”

Credit Suisse mentioned regardless of the buying and selling revenues benefiting from the spike in volatility, the affect of those circumstances, mixed with “continued low levels of capital markets issuance” and widening credit score spreads, have “depressed the financial performance” of the funding financial institution in April and May.

This is “likely to lead to a loss for this division as well as a loss for the Group in the second quarter of 2022,” the buying and selling replace mentioned.

The financial institution’s shares fell greater than 5% shortly after markets opened on Wednesday.

Credit Suisse has endured a string of scandals and mishaps lately, main some shareholders to name for a change in management. Chairman Axel Lehmann advised CNBC in May, nevertheless, that CEO Thomas Gottstein has his full backing to proceed with the “rebuilding” of the corporate.

Gottstein took the reins in 2020 following the resignation of predecessor Tidjane Thiam over a protracted spying scandal.

The financial institution reported a internet loss for the primary quarter of 2022 and introduced a administration reshuffle because it continues to grapple with litigation prices regarding the Archegos hedge fund collapse.

“We would note that our reported earnings will also be affected by continued volatility in the market value of our 8.6% investment in Allfunds Group,” the financial institution added.

Spanish wealthtech platform Allfunds Group, which launched on the Euronext Amsterdam in April 2021, has seen its share worth plunge 52% year-to-date.

Credit Suisse mentioned 2022 will stay a 12 months of “transition” for the financial institution, vowing to speed up cost-cutting throughout the group, and can present additional particulars at its Investor “Deep Dive” on June 28.

The financial institution goals to function a gaggle widespread fairness tier one capital ratio, a measure of financial institution solvency, of 13.5% within the near-term, in keeping with its aim of 14% by 2024.