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Credit Suisse Group Future Growth
Future criteria checks 0/6
We currently don't have sufficient analyst coverage to forecast growth and revenue for Credit Suisse Group.
Key information
-64.8%
Earnings growth rate
-56.59%
EPS growth rate
| Capital Markets earnings growth | 12.0% |
| Revenue growth rate | -23.0% |
| Future return on equity | n/a |
| Analyst coverage | Good |
| Last updated | 23 May 2023 |
Recent future growth updates
No updates
Recent updates
Seeking Alpha • Aug 15
UBS Stock Gains But Don't Get Too Excited Just Yet
Summary UBS terminates loss protection agreement and liquidity backstop from Swiss authorities, causing shares to soar. Credit Suisse repays debt to Swiss government, but UBS still faces challenges from acquired assets. UBS stock is not overvalued, whilst the acquisition of Credit Suisse has potential for future success. Read the full article on Seeking AlphaSeeking Alpha • Jun 06
Credit Suisse: It Is Over
Summary The Saudi National Bank, Credit Suisse's largest shareholder, decided not to leave Zurich and plans to convert its 9.88% equity stake into UBS securities. The Swiss government was forced to implement a systemic solution. We decided to remain neutral, continuing to buy rate UBS. UBS will likely complete the Credit Suisse acquisition by mid-June. Read the full article on Seeking AlphaSeeking Alpha • Feb 21
Credit Suisse shares slide after chairman's remarks attract regulator scrutiny
Credit Suisse (NYSE:CS) ADSs sank 4.6% in Tuesday premarket trading after a report that Switzerland's financial watchdog agency is reviewing comments Credit Suisse (CS) Chairman Axel Lehmann made in December. At the time, Lehmann said client withdrawals had slowed and that liquidity had improved in recent weeks. In the same month, the head of Credit Suisse's (CS) Swiss unit also said outflows had stabilized and some customers had returned their funds. Finma is trying to assess the extent to which Lehmann, and other Credit Suisse (CS) representatives were aware that clients were still withdrawing funds at the time he made the remarks, Reuters reported, citing two people familiar with the matter. Earlier this month, Credit Suisse's (CS) Q4 results showed the company had seen over CHF 1B ($1.1B) of client assets leave the firm.Seeking Alpha • Feb 09
Credit Suisse Group AG reports Q4 earnings; strengthen business momentum in 2023 and beyond
Credit Suisse Group AG press release (NYSE:CS): Q4 GAAP EPS of -CHF 0.46. Revenue of CHF 3.06B (-33.2% Y/Y). Adjusted pre-tax loss of CHF 1.0B. CET1 ratio of 14.1%, Tier 1 leverage ratio of 7.7%. Improved average Liquidity Coverage Ratio of 144%1 at the end of 4Q22 from lower levels in the quarter. In 4Q22, provision for credit losses of CHF 41M were mainly related to CHF 23M in the Investment Bank and CHF 28M in the Swiss Bank. Strengthen business momentum in 2023 and beyond: "We would expect the IB to report a loss in 1Q23. In light of the adverse revenue impact from the previously disclosed exit from non-core businesses and exposures as well as, in particular restructuring charges related to our cost transformation, Credit Suisse would also expect the Group to report a substantial loss before taxes in 2023. The Group’s actual results will depend on a number of factors including the performance of the IB and WM divisions, the continued exit of non-core positions, any goodwill impairments, litigation, regulatory actions, credit spreads and related funding costs, and the outcome of certain other items, including potential real estate sales. We estimate restructuring expenses for 2023 of CHF ~1.6 bn and 2024 of CHF ~1.0 bn, unchanged from previous guidance8 . In respect of regulatory capital, the Group continues to target a 2025 pre-Basel III reform CET1 ratio of more than 13.5%, while expecting to maintain a pre-Basel III reform CET1 ratio of at least 13% throughout the transformation period through 2025."Seeking Alpha • Jan 24
Credit Suisse: A Contrarian Buy
Summary Credit Suisse is currently trading at only 0.2x book value, the cheapest valuation in the European banking sector. Liquidity was a major issue in recent months and the most concerning risk for me, but this seems to have improved in recent weeks. Credit Suisse’s shares are now a buy for contrarian (long-term) investors. Credit Suisse (CS) has a depressed valuation that already reflects most of its fundamental issues, providing an opportunity for long-term (contrarian) investors to buy a deep value play that I think can perform quite well over the next three to five years. Background As I’ve covered in a previous article, Credit Suisse has faced a rough period in recent months, due to some fundamental issues that led to weak investor sentiment towards the bank. This is reflected both in its low share price and valuation, as well as its credit spreads that are near all-time highs. As can be seen in the next graph, Credit Suisse’s five-year credit default swaps currently trade at more than 300 basis points (bps), a higher spread than compared to the period during the global financial crisis of 2008-09, and also compared to the European debt crisis of 2012-13. CDS spread (Bloomberg) This is very important because, contrary to most corporations, banks rely heavily on wholesale and customer’s funding, which makes them very vulnerable to investor sentiment. Indeed, reputational risk is something that investors usually don’t give much importance, but it’s critical for a bank to operate sustainably. This happens because one of the major risks in the banking industry is a ‘bank run’, a situation that usually arises from customer’s perception that a bank may cease to function in the near future and withdraw their money from the bank. This can lead to the collapse of a bank, or at least to receive emergency bailout funds from the central bank, if a significant part of deposits are withdrawn from the bank. While Credit Suisse did not have a ‘bank run’, its liquidity turned clearly worse during last October, as the bank experienced major cash outflows and was out of the bond market, due to the strategy presentation scheduled for the end of the month. However, over the past couple of months, Credit Suisse completed an equity raise, issued bonds in the capital markets, and reportedly has been able to recover some deposits, showing that investor sentiment is likely now better than it was some months ago. While a restructuring and full recovery of investor confidence may take some time to happen, I think investors should question now if Credit Suisse’s current depressed valuation provides an interesting value play or if it’s a value trap. Liquidity As I’ve said, liquidity management is very important for banks in the short term, and while during normal times this usually doesn’t get much attention from investors, during periods of market turmoil or risk-aversion regarding a specific bank, liquidity can turn out to be one of the most critical factors for a bank. Credit Suisse had a comfortable liquidity position at the end of Q3 2022, measured by its liquidity coverage ratio of 192%, which was practically unchanged from the end of the previous quarter. This ratio compares the bank’s high-quality liquid assets (HQLA) to its stressed net cash outflows ((NCO)) expected in 30 days, which means that Credit Suisse had almost double the assets required to cover its cash outflows expected in a stressed situation. However, due to negative press and social media coverage during last October, the bank suffered significant deposits and assets under management (AuM) outflows, leading to a drop in its average daily liquidity ratio to 154% in the first 25 days of October. While this was still above the bank’s regulatory requirements, it was a concerning trend that could put the bank in a difficult situation. Moreover, as the bank was planning to perform a strategic update at the end of October, it was not issuing new debt, putting further pressure in its liquidity management. Following its strategy presentation, the bank has reportedly been able to stop cash outflows and issued new debt, both in the dollar and euro markets, issuing about $7 billion in three senior bonds, showing that despite negative media coverage it still can successfully raise new funds in the credit markets. Nevertheless, the bank’s most recent update about its average daily liquidity coverage ratio is related to third quarter-to-date, as of December 7, 2022, reporting that it was above 140%. As can be seen in the next graph, this liquidity ratio is much lower than its historical trend, showing that liquidity was a great concern for Credit Suisse during Q4. LCR ratio (Credit Suisse) According to Credit Suisse’s CEO, AuM outflows have decreased and the bank sees some money coming back in some parts of the business. While the bank did not update its liquidity position at the end of 2022, it is likely that it has improved towards the end of the year. The bank completed a $4.2 billion capital raise in December, and reportedly this helped to improve customer confidence in the bank, with some money returning to its Swiss bank before the end of the year. With capital markets starting the year with improved investor sentiment, this should also help Credit Suisse to regain money that went out in the last few months, improving its liquidity position. This means that from a liquidity management perspective, Q4 is likely to have been the worst quarter of the current downtrend, and a new period of liquidity stress is not likely in the near future. Valuation Taking into account the difficult backdrop over the past few months, it is not surprising to see that Credit Suisse’s shares are trading near all-time lows. Indeed, over the past year, its shares have declined by about 60%, being a major underperformer in the European banking sector during this period. This weak share price performance has led to a very depressed valuation, as the bank is currently trading at only 0.20x book value. This represents a major discount to the European banking sector average (about 0.87x book value), and its own historical average over the past five years (around 0.6x book value). Valuation (Bloomberg) This depressed valuation represents extreme negative investor sentiment, and Credit Suisse is currently the cheapest bank in Europe. For instance, Deutsche Bank (DB) is currently trading at 0.4x book value, while its Swiss competitor UBS Group (UBS) is trading at 1.2x book value. This clearly shows that Credit Suisse’s valuation is too harsh and while the bank has many issues and its fundamental performance is not expected to improve rapidly, its valuation already seems to reflect this profile. Indeed, Credit Suisse has guided for Q4 2022 pre-tax losses of about CHF 1.5 billion and, according to analysts’ estimates, the bank should report a net loss of about CHF 900 million in 2023.Seeking Alpha • Jan 17
Mizuho Financial is said to hire some Credit Suisse traders in U.S. markets expansion
In an effort to expand its capital markets business in the U.S., Japanese lender Mizuho Financial Group (NYSE:MFG) (OTCPK:MZHOF) is hiring 20 traders from Swiss lender Credit Suisse Group (NYSE:CS), Bloomberg reported Tuesday, citing a spokesman. The trading team is expected to start with Mizuho (MFG) at some point this week. The news aligns with Mizuho's (MFG) acquisition of a big chunk of Credit Suisse's (CS) agency securities-products trading division, the spokesman told Bloomberg. For some context, Credit Suisse (CS) is in the process of a historic restructuring, which includes widespread job cuts and raising $4B, following a series of scandals and losses. CS gained 3.2% in afternoon trading, while MFG slid 3.7%. MFG, though, is in the midst of year-to-date rally (+11.2%) stemmed from the Bank of Japan's surprise move to widen its yield curve control tolerance range. In July 2022, Mizuho acquired Capstone Partners, a Boston, Massachusetts-based middle market investment bank.Seeking Alpha • Dec 16
Fed, FDIC finds issues with Credit Suisse and BNP Paribas's living wills
Two U.S. regulators identified problems n the so-called living will plans submitted by Credit Suisse (NYSE:CS) and BNP Paribas (OTCQX:BNPQF) (OTCQX:BNPQY) (OTCPK:BNPZY), the Federal Reserve Board and Federal Deposit Insurance Cor. said Friday. The banks were mentioned by the two agencies, which jointly review the resolution plans for 71 domestic and foreign banks. Under the regulation, which was adopted in the wake of the 2008 financial crisis, the institutions must describe its strategy "for rapid and orderly resolution in the event of its material financial distress or failure." Credit Suisse's (CS) 2021 submission contained two deficiencies pertaining to resolution planning cash flow forecasting capabilities and the governance for its U.S. operations, the report said. The BNP Paribas (OTCQX:BNPQF) 2021 submission was found to have a shortcoming related to the continuity in resolution of its securities repurchase agreement activity for its U.S. operations, the Fed and FDIC said. The two agencies did not identify shortcomings or deficiencies in the plans from the other banking organizations. Earlier this month, SA contributor IP Banking Research explains why it's turning bullish on Credit Suisse.Seeking Alpha • Nov 01
Credit Suisse's Earnings Weren't Brilliant But It's Unlikely To Go Under
Summary Credit Suisse Group AG reported a huge net loss for 3Q2022. The bank announced a full-scale restructuring program. The Swiss bank's stock plunged to muti-year lows after the results were announced. It is highly there will be a recession soon enough. The bank is in a risky situation. But it seems to me the market is far too pessimistic about Credit Suisse stock. Credit Suisse Group AG (CS) reported an enormous net loss and announced a restructuring plan. It sounds really scary on the surface. But let us dig somewhat deeper. As I mentioned before in my previous article on Credit Suisse, restructuring does not mean liquidation. The company also announced its quarterly earnings results, and these were not as horrible as they looked. Do not get me wrong. I understand Credit Suisse is not going through its best days, but the whole situation still does not look like the Lehman Brothers crash. Let me explain this in some more detail. Credit Suisse's 3Q earnings It could be said that Credit Suisse's reported net loss of CHF 4 bn was much worse than many analysts had expected. At the same time, CHF 3.7 bn of the net loss was due to the impact of the impairment of deferred tax assets. These were all due to the bank's strategic review. The rest of the loss was partly due to the litigation expenses (CHF 0.2 bn) and the poor performance of the investment bank (CHF 0.1 bn). Here I would also like to note the bank's litigation expenses were very moderate, compared to the ones reported in the previous quarters. Another interesting highlight of the reported earnings was the CET1 ratio. Before the CHF 4 bn capital raise, it used to be just 12.6%. But after the capital raise, it totaled 14.0%, a very good result, indeed. However, in order to get CHF 4 bn, the bank had to issue more shares, thus diluting its existing stockholders. But this allowed the bank to boost its liquidity position, an important step, given the situation. Credit Suisse - 3Q earnings presentation Source: Credit Suisse's earnings presentation, slide 4 Also noteworthy was the bank's performance if we see the breakdown of its results according to Credit Suisse's divisions. The excerpt from the presentation below shows Credit Suisse's adjusted pre-tax income/loss. The most successful department was the Swiss bank. It has been traditionally the best-performing division of Credit Suisse for many years. The asset management and the wealth management departments also demonstrated sound performance results. The outsider was, obviously, the investment bank division that reported $640 mln in losses. The good news is that Credit Suisse is transforming and selling this division to focus on better-performing businesses. It was due to the investment bank that Credit Suisse reported a pre-tax loss of CHF 342 mln. In fact, without the investment bank, the bank's pre-tax profit would have been a positive CHF 298 mln. Credit Suisse's 3Q earnings presentation Source: Credit Suisse's earnings presentation, slide 6 If we look at the earnings overview and compare the recently reported results to the ones reported for 2Q 2022, we will see Credit Suisse's operating indicators did not get much worse, indeed. This is especially true of the operating expenses reported for 3Q 2022. Due to the low revenues, the management decided to cut its pay and other financial benefits to the bank's employees. This was the main reason for the lower costs. Credit Suisse's 3Q earnings presentation Source: Credit Suisse's earnings presentation, slide 8 The recent several quarters were also problematic in terms of money outflows. But the negative coverage in the press about Credit Suisse in the recent month or so also made some investors panic. So, the Group's assets under management ("AuM") totaled CHF 1,401 bn for the 3Q 2022. These decreased by CHF 53 bn compared to 2Q 2022. The outflows, meanwhile, totaled CHF 12.9 bn. So, we can assume the bank's AuM fell mostly due to investors' unwillingness to open new accounts at Credit Suisse. But not many people started panicking whilst taking money out of the bank, which is also a positive given the situation. As I have mentioned before, the liquidity level also remained tolerable and even improved after the bank's capital raise. Credit Suisse's 3Q earnings presentation Source: Credit Suisse's earnings presentation, slide 9 The restructuring plan I would also like to say a couple of words about the bank's restructuring plan. It seems the process will be long, but it leaves investors some hope. After all, the bank has already boosted its liquidity by issuing shares and is going to cut costs by 15% in the long run. By issuing more shares, the bank will obviously dilute its existing shareholders, which is bearish for the stock price. However, the good news is that a very serious investor, namely Saudi National Bank, is going to invest CHF 1.5 bn in the newly issued shares. Overall, the bank expects its restructuring charges to total CHF 2.9B from Q4 2022 to 2024. It might sound expensive, but this is the total amount of money CS will pay for reforming its businesses. Credit Suisse's cost base is expected to decrease by around CHF 2.5 bn to total CHF 14.5 bn per year in 2025. In order to achieve that, the bank will cut 2,700 full-time jobs, or 5% of its employees, in Q4 2022. By the end of 2025, CS expects to cut its jobs by 6,500. So, the bank's workforce would fall to around 43,000, down from 52,000 at the end of Q3 2022. There were also some important steps really aimed at de-risking Credit Suisse's business. Amongst them was the bank's decision to transfer a majority of the Securitized Products Group to an investor group led by Apollo Global Management (NYSE:APO). This is good for CS, since trading securitized products is very risky during the recession. And there will highly likely be one soon. So, the more conservative the bank's business is, the better it is. The management also decided to split the investment bank into three units, namely, the markets, the CS First Boston (centered around capital markets and advisory activities), as well as a capital release unit. The markets business will be about trading equities, foreign currencies, and other assets. It will also closely cooperate with Credit Suisse's wealth management and Swiss bank franchises. CS First Boston will be responsible for attracting third-party capital. The capital release unit will comprise of securitized products group and a non-core unit. There are also rumors CS First Boston will merge with M Klein & Company, which, if it happens, will be a positive for Credit Suisse since this will allow the bank to raise cash. Risks Credit Suisse has been recording losses for a while. What is more, it operates in an industry that is highly cyclical. The recent economic news also inspires fear. Central banks all over the world are hiking interest rates in order to fight inflation. The Fed is particularly hawkish here. At the same time, regions around the world are experiencing their own pains. This can be said about the U.S., China, and Europe. But particularly worrying seems to be the situation with the Bank of England. It had to substantially intervene in the bond market in order to prevent the financial market collapse and therefore a very serious recession.Seeking Alpha • Oct 24
French court approves Credit Suisse'$238M settlement in tax case
Credit Suisse (NYSE:CS) shares have risen 1.6% in Monday early afternoon trading in Zurich after a French court approved the lender's agreement to pay EUR 238M ($234M) to settle an investigation into its historical cross-border private-banking services. The court approved the agreement that settles a tax fraud and money-laundering probe by France's financial prosecution office, Reuters reported Monday. The settlement, which does not include a recognition of criminal liability, "marks another important step in the proactive resolution of litigation and legacy issues," Credit Suisse (CS) said in a statement. Credit Suisse (CS) ADSs slipped 0.6% in Monday premarket trading in the U.S. On Thursday, the bank is set to unveil its restructuring plan, as the company struggles to put years of scandals and missteps behind it. Last week, the company agreed to pay $495M to resolve claims related to residential mortgage-backed securities sold in the runup to the 2008 financial crisis.Seeking Alpha • Oct 13
Credit Suisse: Restructuring Does Not Mean Liquidation
Summary Credit Suisse shares have been suffering for a while since 2021. But the recent several months were a disaster for its shares. There have been rumors recently the bank is about to be liquidated. This is not true even though the bank may need to attract further capital. Credit Suisse has recently bought back some of its debt, a very good sign. I wouldn't recommend conservative investors to buy Credit Suisse's shares but CS stock may be a good way to make money for risk-savvy people. Credit Suisse's (CS) shares have been having a difficult period since 2021 when the Greensill and Archegos scandals shook investors' confidence in the bank. But the bank has just announced its transformation or restructuring plans. The details are still unknown but will become so on 27 October after the bank publishes its quarterly earnings results. Bear in mind "restructuring" does not mean "liquidation". A good example of a relatively successful transformation was that of Deutsche Bank (DB). A piece of good news was the bank's announcement it would buy back some of its debt. Here I will explain why Credit Suisse is facing problems but is not going bankrupt. Recent news and developments There were some recent news and developments that made the investor community panic. Prices of the bank's shares and bonds have plunged substantially in the last several weeks due to doubts about Credit Suisse's ability to pay for a restructuring plan that is about to be announced later this month. Seeking Alpha, meanwhile, has provided the bank with a really bad rating. Seeking Alpha's grades of Credit Suisse Seeking Alpha Source: Seeking Alpha The growth, the momentum, the revisions, and even the valuations are horrible. But what has really happened to the bank and why is it under so much pressure right now? Sure, Credit Suisse has suffered from many scandals and management missteps. It was reported by Bloomberg that CS was seeking an outside investor to attract fresh capital to be able to change its structure. But this information was not confirmed by the bank. It is clear the bank is about to restructure its businesses but the management did not say they needed to attract further funding from outside investors. Moreover, they even assured the bank's stakeholders of Credit Suisse's sufficient liquidity. A good proof of this was the news Credit Suisse offered to buy back up to $3 billion of its debt, thus taking advantage of the bank's falling bond prices. This made Credit Suisse's shares rise. The recent debt buyback may raise investor confidence in Credit Suisse's financial position. Obviously, the management decision also allowed the bank to lower its interest expenses, to save cash and to improve its balance sheet. Some of Credit Suisse's debt is denominated in Euros and some in USDs. The bank is offering to buy back its debt at a discount. For example, it will pay less than 96% of the face value for the EUR 750M note. Although this might not sound like extraordinary news, Credit Suisse's bonds have always traded over and above their face value. So, buying the bank's bonds at a discount is already a win. In spite of some positive news, many analysts and commentators claimed the bank was about to be liquidated. But some went even further by questioning whether the Credit Suisse "collapse" would trigger a Lehman Brothers crisis event. The truth is the current macroeconomic environment is full of risks. But the current situation with Credit Suisse is not the end of the world for the bank and even CS itself. Why restructuring is not the end of the world for Credit Suisse Restructuring has happened in the histories of many banks. The most recent and obvious story was that of Deutsche Bank. It is hard to say that DB is doing fantastically well. But its results have shown some positive dynamics compared to the earnings reported in the past. The point I am making is that "restructuring" is not the same as "liquidation". Moreover, restructuring should help banks get "leaner and fitter" by focusing on the most profitable businesses and getting rid of the loss-making ones. I do not pretend to have a crystal ball and have clear knowledge of the future. But restructuring itself is not the end for Credit Suisse. Let us hope it would be successful. The 2008 crisis and the current situation Crises have many things in common. At the same time, many recessions start in one particular sector. For example, in the early 2000s the Dot.com bubble burst. As its name suggests, it was due to the high-tech sector that was ridiculously overvalued. The high-tech stocks fell below their all-time lows, whilst many high-tech companies went bankrupt. Other sectors of the US economy were also affected but to a much lesser degree. The 2008 crisis started in the housing sector but the financial sector also suffered terribly due to many banks' horrible investment portfolios. But in spite of this, many banks survived thanks to unprecedented help from the governments in the form of bailouts. Credit Suisse was also bailed out by the Swiss government. The reason why I am saying this is that in this situation when the bank's management made very serious mistakes and the bank was about to get liquidated, the government stepped in since Credit Suisse was "too big to fail". Right now nothing of the kind is happening to Credit Suisse. The management is due to announce their restructuring measures on 27 October. I cannot guarantee these reforms would make the bank sound and profitable overnight. At the same time, restructuring does not mean "liquidation", whilst the measures taken by the management should hopefully make Credit Suisse leaner and fitter. Risks Right now the central banks are getting very hawkish. Many countries around the world are facing abundant pressures due to multi-decade high inflation readings. Consumers are facing declining incomes, whilst the ECB, the SNB (the central bank of Switzerland), and most importantly the Federal Reserve are forced to substantially raise the interest rates to cope with the rising price pressures. How far they would go is still not entirely clear. It seems highly likely a recession is near. At the same time, it is clear the banking sector would suffer just like any cyclical industry.Seeking Alpha • Oct 01
Credit Suisse And Deutsche Bank At Distressed Valuations: Which Bank Should You Avoid?
Summary Both CS and DB are trading at distressed valuation. CS will have to go through a painful restructure. DB is already delivering and benefits from interest rate tailwinds. Investors should avoid CS and buy DB. Credit Suisse (CS) is currently trading at 0.23x tangible book. Deutsche Bank (DB) is trading at 0.3x tangible book value. These are very distressing valuations for banks, even so for European banks. CS, however, is in deep trouble due to a steady stream of risk management scandals in its investment bank, including the Archegos Capital fiasco that cost it over $5 billion. I have written on this episode previously here and noted the followings: Beyond the financial loss, there are other significant downstream implications for CS in the short and medium term. Whilst the current share price appears attractive in the context of the long-term valuation of the stock, I am not quite ready to buy the dip. There appear to be major risk management matters plaguing its investment bank and fixing these will likely be a protracted and costly process. DB, on the other hand, is in excellent shape and has executed the strategy envisioned by DB's CEO, Mr. Sewing, marvelously. It is on a credible path to earning greater than 10% RoTCE by 2025, powered by strong tailwinds from the paradigm shift in the interest rates settings in the Eurozone. It also has a low-risk business model, which means it is likely to side-step the type of banana peels CS has stepped on. The problems with Credit Suisse's business model On the face of it, CS has a very attractive business mix that leans on capital-light wealth management business (~two-thirds of the bank) and is complemented by an appropriately sized investment bank (~one-third of the bank). It sounds almost similar to a European version of Morgan Stanley (MS), but there are differences, of course. CS investment bank is geared mostly to credit markets and capital markets issuances. These are areas that are quite challenging in the current macroeconomic environment. Also, due to the Archegos Capital debacle, it was forced to retreat from the Prime Finance business, which is typically a very lucrative and profitable business line for investment banks. Also, in the current environment, its areas of strength in the leveraged finance, M&A, and SPAC deal activity are very much muted. CS has also taken material (but yet unquantified losses) on the leveraged buyout of Citrix. On the flip side, CS has little exposure to FX trading, rates, and commodities which are more stable annuity-like trading businesses. These business areas are currently benefiting strongly from the recent market volatility. Together with the colossal risk management lapses, the CS investment bank is now in a tailspin. This is driving up its funding cost and can easily turn into a death spiral as key rainmakers desert the ship. This has already begun to play out with the departure of key executives to Citigroup (C) and others that are "pursuing other opportunities". The management team has no options but to restructure and downsize the investment bank and do so as quickly as possible. CS is expected to deliver its strategy update on the 27th of October. The problem is that restructuring an investment bank is a long, protracted, risky, and costly exercise. Firstly, CS will need to raise a significant amount of capital, and in the current environment and considering its market cap, this is going to be extremely dilutive for existing shareholders. Secondly, CS will likely need to set up a non-core bank where it would look to unwind long-term trades over several years and/or sell these at a significant loss. This non-core unit will likely bleed losses for many years as was the experience in DB and Barclays (BCS) multi-year restructures. Thirdly, the management team will need to figure out how to retain key staff in the firm, especially as the U.S. banks are aggressively expanding into the European capital markets. Finally, the regulators will extract their pound of flesh as well. CS will need to deliver a multi-year credible program designed to enhance its control infrastructure. This will take years to achieve and be very costly. In summary, this will likely be a multi-year story with no guarantee of success. Importantly, shareholders will come last on the priority list as CS will need to balance other stakeholders' requirements. Deutsche Bank restructure is a success After several failed attempts, Mr. Sewing stabilized the Deutsche Bank ship. The management team has delivered on the cost-cutting program with typical German efficiency. The investment bank is focused on the bread and butter of trading income comprising FX, rates, and credit trading. As such, the investment bank looks like it is sustainably earning its cost of capital as well as continuing to take market share. DB has completely exited the Equities trading business and therefore has managed to side-step some of the risks the likes of CS have faced. Importantly, DB's accrual businesses of the corporate and private banks are doing well and showing strong revenue growth. DB is well on the path of delivering 8% RoTCE for 2022 and with a credible path to greater than 10% in 2025 and this is in spite of the macroeconomic headwinds and expected deep recession in the eurozone.Seeking Alpha • Sep 23
Credit Suisse stock extends losses amid report of potential capital raise
Credit Suisse (NYSE:CS) ADSs have sunk 9.1% in U.S. premarket trading after Reuters reported on Thursday that the Swiss bank had approached investors about raising fresh capital. Raising money by selling new shares would dilute the holdings of existing shareholders. As a result, when companies announce new stock offerings, their share prices usually decline. People close to the bank told the Financial Times that seeking more capital from shareholders would be a last resort due to the stock's depressed price. As of 8:56 AM ET, Credit Suisse ADSs were $4.29. In trading in Switzerland, its share were down 10% to CHF4.18 (US$4.27) at 2:43 PM CET. Credit Suisse (CS) hasn't responded to a request for comment. In July, the company said it would announce the results of its strategic review when it reports Q3 earnings, which is is scheduled for Oct. 27. The FT reported Thursday that the company is considering splitting its investment bank into three units, including a so-called "bad bank" to wind down problem assets.Seeking Alpha • Sep 16
Credit Suisse reportedly explores bringing back First Boston brand
Credit Suisse (NYSE:CS) is considering bringing back the First Boston investment banking brand name as the Swiss lender explores ways to reverse the downward pressure seen in its investment bank returns, Bloomberg reported Friday, citing people with knowledge of the matter. In doing so, executives proposed that Credit Suisse (CS) should rename its U.S. investment banking operations, one of the people told Bloomberg, noting that there's no immediate plans to spin off the troubled unit. For some context, Credit Suisse (CS) took an initial stake in First Boston in 1978 and started using the name 10 years later. In 1990, CS acquired control of the investment bank. It wasn't until 2005 (after 17 years) when CS decided to retire First Boston's name from its investment bank division. Credit Suisse did not immediately respond to a request for comment by Seeking Alpha. The potential move comes as the Swiss firm sees huge drawdowns in its investment banking net revenues, down 43% Y/Y in Q2. Earlier this month (Sep. 2), Credit Suisse considered cutting around 5K jobs.Seeking Alpha • Sep 02
Credit Suisse considering to cut around 5,000 jobs
As part of a cost reduction step, Credit Suisse (NYSE:CS) is considering cutting around 5,000 jobs - Reuters. The company has already said earlier that it will cut costs below CHF15.5B ($15.8B) in the medium term, versus an annualised CHF16.8B this year. Ulrich Körner, a restructuring expert promoted to CEO just over a month ago replacing Thomas Gottstein has been given the task of paring back investment banking and cutting more than $1B in costs to help the bank recover from a string of setbacks and scandals. The bank aims to start offering wealth management services in China next year on hopes of improvement of its fortune. Analysts at Deutsche Bank estimate that it may need to bolster capital by CHF4B to shore up its buffers and fund the revamp. CS is at high risk of cutting its dividend, Learn whySeeking Alpha • Aug 02
Credit Suisse downgraded to Sell at Goldman as IB returns to stay suppressed
Goldman Sachs analyst Chris Hallam downgraded Credit Suisse (NYSE:CS) to Sell from from Neutral on Tuesday on the expectation that the firm's investment bank returns will remain suppressed and its wealth management unit performance will pause due to outflows. Furthermore, Hallam sees Credit Suisse's (CS) organic capital generation below its peers "and risk-weighted asset inflation + litigation + restructuring has the potential to further deplete capital to a relatively low buffer vs. regulatory minimums." Three developments could make the analyst more positive on the stock — a clear, deliverable plan for attaining 10%+ returns in the investment bank; a significant improvement in market conditions/macro uncertainty, which would push up capital markets and assets under management; and reduced capital consumption from litigation and restructuring vs. historical levels. Hallam's Sell rating is more bearish than the Quant rating of Hold and contrasts with the average Wall Street rating of Buy. Recall that last week, Credit Suisse (CS) announced a new CEO, launched a comprehensive review, and plans to drive down costs. SA contributor Mare Research, with a Hold on CS, says the bank appears very cheap and for good reason.Seeking Alpha • Jul 26
Credit Suisse CEO Thomas Gottsein said to be on his way out - WSJ
Thomas Gottstein is expected to leave Credit Suisse (NYSE:CS) as its CEO, part of a plan to turn around the struggling Swiss bank, the Wall Street Journal reported, citing people familiar with the bank. The announcement could come as soon as Wednesday, they said. A Credit Suisse (CS) spokesman declined to comment on the issue when contacted by Seeking Alpha. In June, the company said 2022 will be a transition year for the company as it seeks to accelerate cost initiatives with the aim of maximizing cost savings from 2023 on. As recently as May, Credit Suisse (CS) Chairman Axel Lehman said the bank wasn't looking to replace Gottstein. He was named CEO in February 2020, replacing Tidjane Thiam, who left in the wake of a spying scandal. Gottstein then faced steering the bank through the twin collapses of Greensill Capital and Archegos Capital in 2021. Late last month, a Swiss court found the company guilty of failing to stop the laundering of Bulgarian drug money, the Financial Times reported.Seeking Alpha • Jul 13
Credit Suisse postpones debut of its real estate fund on market woes
Credit Suisse (NYSE:CS) has delayed the initial public offering of its real estate fund 1a Immo PK due to turbulent market conditions, the Swiss lender said Wednesday. "The market for real-estate funds is currently going through a phase of high volatility and strongly fluctuating trading volumes, so that a successful IPO in the fourth quarter of 2022 cannot be guaranteed," Credit Suisse said, as quoted by Reuters. Credit Suisse (CS) aimed to list 1a Immo PK in Q4 2022. Note that 1a Immo PK invests in residential properties and mixed residential and commercial properties. The fund is available just to Swiss Pension Funds as well as tax-exempt social insurances. Shares of Credit Suisse (CS), meanwhile, are edging down 0.7% in premarket trading. Towards the end of June, Credit Suisse explores reducing tech costs to spend more reaching wealthy clients.Seeking Alpha • Jun 08
Credit Suisse YTD - Third Profit Warning
Credit Suisse's third profit warning of the year scares European banks - the EuroStoxx 600 Banks Index loses nearly 1% after the announcement. (As always) there will be an acceleration of the cost-cutting initiatives. The company looks discounted compared to its closest peers, but we already told you that - avoid the bank.Earnings and Revenue Growth Forecasts
| Date | Revenue | Earnings | Free Cash Flow | Cash from Op | Avg. No. Analysts |
|---|---|---|---|---|---|
| 12/31/2025 | 14,312 | 452 | N/A | N/A | 11 |
| 12/31/2024 | 14,038 | -1,354 | N/A | N/A | 14 |
| 12/31/2023 | 11,665 | 6,762 | N/A | N/A | 4 |
| 3/31/2023 | 28,403 | 5,412 | N/A | N/A | N/A |
| 12/31/2022 | 14,541 | -7,293 | 12,382 | 13,820 | N/A |
| 9/30/2022 | 16,091 | -7,977 | 11,179 | 12,731 | N/A |
| 6/30/2022 | 17,972 | -3,517 | 9,931 | 11,439 | N/A |
| 3/31/2022 | 19,483 | -1,672 | 32,550 | 34,037 | N/A |
| 12/31/2021 | 18,308 | -1,650 | 35,519 | 36,938 | N/A |
| 9/30/2021 | 18,731 | 74 | 21,350 | 22,651 | N/A |
| 6/30/2021 | 18,220 | 219 | 17,529 | 18,786 | N/A |
| 3/31/2021 | 18,978 | 1,104 | 185 | 1,396 | N/A |
| 12/31/2020 | 21,000 | 2,669 | -7,219 | -6,031 | N/A |
| 9/30/2020 | 21,505 | 3,874 | -7,052 | -5,766 | N/A |
| 6/30/2020 | 21,654 | 4,209 | -18,811 | -17,519 | N/A |
| 3/31/2020 | 21,287 | 3,984 | -21,187 | -19,895 | N/A |
| 12/31/2019 | 21,584 | 3,419 | -18,631 | -17,338 | N/A |
| 9/30/2019 | 20,665 | 2,826 | -22,600 | -21,532 | N/A |
| 6/30/2019 | 20,207 | 2,369 | -3,551 | -2,431 | N/A |
| 3/31/2019 | 20,213 | 2,079 | 1,821 | 2,935 | N/A |
| 12/31/2018 | 20,608 | 2,024 | 11,788 | 12,883 | N/A |
| 9/30/2018 | 21,049 | -361 | 8,042 | 9,247 | N/A |
| 6/30/2018 | 21,199 | -541 | 4,420 | 5,544 | N/A |
| 3/31/2018 | 20,789 | -885 | -293 | 800 | N/A |
| 12/31/2017 | 20,721 | -983 | -9,590 | -8,522 | N/A |
| 9/30/2017 | 20,517 | -1,476 | 27,515 | 28,555 | N/A |
| 6/30/2017 | 20,257 | -1,679 | 13,654 | 14,709 | N/A |
| 3/31/2017 | 20,316 | -1,815 | 14,616 | 15,720 | N/A |
| 12/31/2016 | 19,268 | -2,710 | N/A | 26,775 | N/A |
| 9/30/2016 | 18,362 | -5,882 | N/A | 11,003 | N/A |
| 6/30/2016 | 19,579 | -5,153 | N/A | 22,123 | N/A |
| 3/31/2016 | 21,311 | -4,291 | N/A | 28,935 | N/A |
| 12/31/2015 | 23,308 | -2,958 | N/A | 15,068 | N/A |
| 9/30/2015 | 25,337 | 3,479 | N/A | 4,384 | N/A |
| 6/30/2015 | 25,966 | 3,588 | N/A | 2,500 | N/A |
| 3/31/2015 | 25,511 | 1,856 | N/A | -15,321 | N/A |
| 12/31/2014 | 25,664 | 1,641 | N/A | -18,080 | N/A |
| 9/30/2014 | 25,786 | 494 | N/A | -18,930 | N/A |
| 6/30/2014 | 24,883 | -114 | N/A | -10,960 | N/A |
| 3/31/2014 | 25,343 | 1,479 | N/A | 14,764 | N/A |
| 12/31/2013 | 25,659 | 1,728 | N/A | 21,047 | N/A |
| 9/30/2013 | 25,027 | 2,407 | N/A | 43,713 | N/A |
| 6/30/2013 | 24,768 | 2,345 | N/A | 11,614 | N/A |
| 3/31/2013 | 24,240 | 2,100 | N/A | 15,152 | N/A |
| 12/31/2012 | 22,908 | 1,084 | N/A | -13,014 | N/A |
| 9/30/2012 | 21,969 | 190 | N/A | -6,412 | N/A |
| 6/30/2012 | 23,226 | 625 | N/A | 27,700 | N/A |
Analyst Future Growth Forecasts
Earnings vs Savings Rate: CS's earnings are forecast to decline over the next 3 years (-64.8% per year).
Earnings vs Market: CS's earnings are forecast to decline over the next 3 years (-64.8% per year).
High Growth Earnings: CS's earnings are forecast to decline over the next 3 years.
Revenue vs Market: CS's revenue is expected to decline over the next 3 years (-23% per year).
High Growth Revenue: CS's revenue is forecast to decline over the next 3 years (-23% per year).
Earnings per Share Growth Forecasts
Future Return on Equity
Future ROE: Insufficient data to determine if CS's Return on Equity is forecast to be high in 3 years time
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Company Analysis and Financial Data Status
| Data | Last Updated (UTC time) |
|---|---|
| Company Analysis | 2023/06/13 21:13 |
| End of Day Share Price | 2023/06/09 00:00 |
| Earnings | 2023/03/31 |
| Annual Earnings | 2022/12/31 |
Data Sources
The data used in our company analysis is from S&P Global Market Intelligence LLC. The following data is used in our analysis model to generate this report. Data is normalised which can introduce a delay from the source being available.
| Package | Data | Timeframe | Example US Source * |
|---|---|---|---|
| Company Financials | 10 years |
| |
| Analyst Consensus Estimates | +3 years |
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| Market Prices | 30 years |
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| Ownership | 10 years |
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| Management | 10 years |
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| Key Developments | 10 years |
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* Example for US securities, for non-US equivalent regulatory forms and sources are used.
Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more.
Analysis Model and Snowflake
Details of the analysis model used to generate this report is available on our Github page, we also have guides on how to use our reports and tutorials on Youtube.
Learn about the world class team who designed and built the Simply Wall St analysis model.
Industry and Sector Metrics
Our industry and section metrics are calculated every 6 hours by Simply Wall St, details of our process are available on Github.
Analyst Sources
Credit Suisse Group AG is covered by 26 analysts. 14 of those analysts submitted the estimates of revenue or earnings used as inputs to our report. Analysts submissions are updated throughout the day.
| Analyst | Institution |
|---|---|
| Markus Mayer | Baader Helvea Equity Research |
| Jeremy Sigee | Barclays |
| Eoin Mullany | Berenberg |