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Credit Suisse on Wednesday reported a net loss for the first quarter of 2022 and announced a management reshuffle, as the Swiss lender struggles with litigation costs and the fallout from the Russia-Ukraine war.
The net loss came in at 273 million Swiss francs ($283.5 million) for the quarter, after it sent out a profit warning to the markets last week. On Wednesday, the Swiss bank confirmed that Russia-related losses amounted to 206 million Swiss francs. There was also a hit of 155 million Swiss francs related to the Archegos scandal.
Speaking to CNBC’s Geoff Cutmore, Thomas Gottstein, chief executive officer of Credit Suisse, said it was a “tough quarter.”
“We had certain one-offs like the legal provisions which was part of our legacy work and dealing with some of the old legacy cases, we obviously also had some headwinds with respect to Russia; so obviously we cannot be happy with a 0.4 billion pre-tax loss,” he said.
Litigation costs
One of the biggest challenges for Credit Suisse this quarter was litigation costs, reporting that operating expenses were up 26% from a year ago.
“Our operating expenses were higher year on year, driven in particular by higher previously reported litigation expenses of 703 million Swiss francs for the quarter as we continued our proactive approach to resolving litigation matters,” Gottstein said in a statement.
Gottstein added to CNBC that “no large bank in the world can say we are done with legal cases … we have made tremendous progress, as I said, especially with our U.S. cases.”
Wednesday’s earnings come after steep losses at the end of 2021 amid an array of scandals. Its chairman, Antonio Horta-Osorio, resigned earlier this year after repeatedly violating Covid-19 quarantine rules.
Horta-Osorio had come in with the intention of cleaning up the bank’s corporate culture after its investment banking division suffered considerable hits in 2021 due to its involvement with collapsed investment firm Archegos Capital and insolvent supply chain finance company Greensill.
For the whole of 2021, it posted a net loss of 1.57 billion Swiss francs, well below market expectations. The stock is down 20.6% since the start of the year.
Management reshuffle
The bank also announced changes to its executive board Wednesday. David Mathers, who has been chief financial officer since 2010, is leaving the bank. However, he will remain in his current position until a replacement is found.
In addition, Helman Sitohang is stepping down as CEO of the Asia-Pacific region and Romeo Cerutti is retiring from his group general counsel role. Francesca McDonagh is taking over as CEO of the Europe, Middle East and Africa in October.
Other highlights for the quarter, included:
- Revenues dropped 42% from a year ago to 4.4 billion Swiss francs.
- Return on tangible equity, a measure of bank profitability, was 2.6% — unchanged from a year ago.
- CET 1 ratio, a measure of bank solvency, was 13.8% versus 12.2% a year ago.
—CNBC’s Elliot Smith contributed to this article.