![\"Credit](\"\/campus\/wp-content\/uploads\/sites\/2\/2022\/10\/2022-1027_CS_1-1100x619.jpg\")
<\/figure>\n\n\n\nWinding Up with Losses<\/strong><\/h2>\n\n\n\nIn Q3, IB net revenue at the bank plummeted 58% year-on-year, while its wealth management division sank 18% \u2013 contributing to its overall, net sales loss of CHF 3.8 billion (-30%).<\/p>\n\n\n\n
Credit Suisse CFO Dixit Joshi said that the firm\u2019s Q3 financial performance reflected the continued \u201cchallenging conditions\u201d of \u201cheightened market volatility, weak customer flows, and ongoing client deleveraging.\u201d Joshi attributed the key drivers of the latest numbers to \u201csubstantially lower levels of activity across the industry in equity capital markets and leveraged finance, which contributed to a weak performance in the investment bank, and subdued client activity in wealth management, especially in terms of transaction-based activity.\u201d<\/p>\n\n\n\n
Total net revenues at its wealth management unit, for example, dropped to CHF 1.36 billion in Q3 from CHF 1.66 billion in the same year-ago quarter, amid CHF 6.4 billion worth of net outflows \u2013 apparently due to deleveraging, as well as \u201cproactive derisking\u201d.<\/p>\n\n\n\n
Credit Suisse also blamed the macro environment for its woes, including geopolitics, as well \u201csignificant\u201d monetary tightening by major global central banks in response to continued, elevated levels of inflation.<\/p>\n\n\n\n
Social Media Mayhem<\/strong><\/h2>\n\n\n\nThe firm further said its reputation fell victim to social media trolls, who Joshi held accountable for, among other adverse results, an estimated US$13 billion worth of new asset outflows in Q3 across the franchise.<\/p>\n\n\n\n
At the beginning of October<\/a>, Ellen Chang, a columnist for The Street, wrote thatsocial media accounts on Twitter and Reddit began \u201cspeculating about the potential fallout of Credit Suisse\u201d as shares of the well-known Swiss bank fell to new record lows, mirroring its bonds.<\/p>\n\n\n\nChang explained that the Swiss investment bank has \u201cfaced rumors for several months since the behemoth said in July it would alter the focus of its business and exit some businesses to lower its risks.\u201d <\/p>\n\n\n\n
Three-Year Plan<\/strong><\/h2>\n\n\n\nIndeed, Credit Suisse Thursday had rolled-out a series of strategic maneuvers it plans to execute over the coming three years, including \u201ca radical restructuring of the Investment Bank, an accelerated cost transformation, and strengthened and reallocated capital,\u201d all of which are designed to create a \u2018new Credit Suisse\u2019.<\/p>\n\n\n\n
The series of changes may be underscored by the shedding of thousands of positions, as well as the sale of its securitized products group, and a capital increase of CHF 4 billion.<\/p>\n\n\n\n
Credit Suisse chair Axel Lehmann said that the 166-year-old firm has become \u201cunfocused\u201d in recent years, prompting the employment of \u201ca radical strategy and a clear execution plan to create a stronger, more resilient and more efficient bank with a firm foundation.\u201d<\/p>\n\n\n\n
The bank\u2019s CEO Ulrich K\u00f6rner echoed the chair\u2019s comments while highlighting that the new formation of its executive board<\/a> is \u201cfocused on restoring trust through the relentless and accountable delivery of our new strategy, where risk management remains at the very core of everything we do.\u201d<\/p>\n\n\n\nDealing with Debt as Credit Confidence Wanes<\/strong><\/h2>\n\n\n\nMeanwhile, on the bank\u2019s earnings call, concerns arose about Credit Suisse\u2019s ability to finance \/ refinance its debt obligations \u2013 notably since S&P Global downwardly revised its outlook<\/a> on the company earlier in October \u2013 a couple of months after Fitch cut its credit rating<\/a> one notch to \u2018BBB\u2019 from \u2018BBB+\u2019.<\/p>\n\n\n\nWhile the company expects to tap the debt markets in Q4 2022\u2014perhaps to the tune of around US$6.5 billion, including US$4.5 billion at the holdco issuer level \u2013 certain of its U.S. dollar-denominated, long-dated bonds have been suffering material losses, and were trading Thursday at deep discounts.<\/p>\n\n\n\n
For instance, issuer Credit Suisse AG\/London\u2019s 2.55% notes due March 2030 were last bid at around US$72 (7.49% yield-to-maturity), while its 2% October 2029s were trading in the area of US$78 (5.86% ytm).<\/p>\n\n\n\n
Market participants\u2019 perceptions of the company\u2019s creditworthiness have also been deteriorating over the past three months, with spreads on its five-year credit default swaps (CDS) roughly 50 basis points wider to 260.9 bps. By comparison, five-year CDS spreads for Swiss rival UBS Group and Germany\u2019s Deutsche Bank were around +5 bps (112.2 bps) and +6 bps (136.4 bps) over the same period, respectively \u2013 about half the cost.<\/p>\n\n\n\n
Credit Suisse also seems to be particularly sensitive to macro volatility, which may impede \u2013 or even upend \u2013 the execution of the company\u2019s strategic plans.<\/p>\n\n\n\n
S&P Global analyst Anna Lozmann noted earlier in October that there appear to be increasing risks to Credit Suisse’s operating turnaround, given the \u201cfast-deteriorating economic environment and recent market turbulence.\u201d<\/p>\n\n\n\n
At the same time, Lozmann gave some credit to the group’s commitment to strong capital, which remained a key support to its single-\u2018A\u2019, and group\u2019s \u2018BBB\u2019 ratings, \u201cproviding it some buffer for deteriorating financial prospects and to implement its updated strategy and expected business reorganization\u201d.<\/p>\n\n\n\n
At the end of Q3, Credit Suisse held roughly CHF 163 billion worth of long-term loans.<\/p>\n\n\n\n
Year-to date in 2022, shares of Credit Suisse are down over 50%, while UBS Group is off about 9.3%, Deutsche Bank is down 20.5%, and the iShares MSCI Europe Financials exchange-traded fund (ETF) has fallen roughly 20.6%.<\/p>\n\n\n\n
Learn More<\/strong><\/h2>\n\n\n\nTraders\u2019 Academy: Corporate Earnings<\/a><\/p>\n\n\n\nTraders\u2019 Academy: Introduction to U.S. Corporate Bonds<\/a><\/p>\n\n\n\nTraders\u2019 Academy: Economic Indicators (European Union)<\/a><\/p>\n\n\n\n
The firm further said its reputation fell victim to social media trolls, who Joshi held accountable for, among other adverse results, an estimated US$13 billion worth of new asset outflows in Q3 across the franchise.<\/p>\n\n\n\n
At the beginning of October<\/a>, Ellen Chang, a columnist for The Street, wrote thatsocial media accounts on Twitter and Reddit began \u201cspeculating about the potential fallout of Credit Suisse\u201d as shares of the well-known Swiss bank fell to new record lows, mirroring its bonds.<\/p>\n\n\n\n Chang explained that the Swiss investment bank has \u201cfaced rumors for several months since the behemoth said in July it would alter the focus of its business and exit some businesses to lower its risks.\u201d <\/p>\n\n\n\n Indeed, Credit Suisse Thursday had rolled-out a series of strategic maneuvers it plans to execute over the coming three years, including \u201ca radical restructuring of the Investment Bank, an accelerated cost transformation, and strengthened and reallocated capital,\u201d all of which are designed to create a \u2018new Credit Suisse\u2019.<\/p>\n\n\n\n The series of changes may be underscored by the shedding of thousands of positions, as well as the sale of its securitized products group, and a capital increase of CHF 4 billion.<\/p>\n\n\n\n Credit Suisse chair Axel Lehmann said that the 166-year-old firm has become \u201cunfocused\u201d in recent years, prompting the employment of \u201ca radical strategy and a clear execution plan to create a stronger, more resilient and more efficient bank with a firm foundation.\u201d<\/p>\n\n\n\n The bank\u2019s CEO Ulrich K\u00f6rner echoed the chair\u2019s comments while highlighting that the new formation of its executive board<\/a> is \u201cfocused on restoring trust through the relentless and accountable delivery of our new strategy, where risk management remains at the very core of everything we do.\u201d<\/p>\n\n\n\n Meanwhile, on the bank\u2019s earnings call, concerns arose about Credit Suisse\u2019s ability to finance \/ refinance its debt obligations \u2013 notably since S&P Global downwardly revised its outlook<\/a> on the company earlier in October \u2013 a couple of months after Fitch cut its credit rating<\/a> one notch to \u2018BBB\u2019 from \u2018BBB+\u2019.<\/p>\n\n\n\n While the company expects to tap the debt markets in Q4 2022\u2014perhaps to the tune of around US$6.5 billion, including US$4.5 billion at the holdco issuer level \u2013 certain of its U.S. dollar-denominated, long-dated bonds have been suffering material losses, and were trading Thursday at deep discounts.<\/p>\n\n\n\n For instance, issuer Credit Suisse AG\/London\u2019s 2.55% notes due March 2030 were last bid at around US$72 (7.49% yield-to-maturity), while its 2% October 2029s were trading in the area of US$78 (5.86% ytm).<\/p>\n\n\n\n Market participants\u2019 perceptions of the company\u2019s creditworthiness have also been deteriorating over the past three months, with spreads on its five-year credit default swaps (CDS) roughly 50 basis points wider to 260.9 bps. By comparison, five-year CDS spreads for Swiss rival UBS Group and Germany\u2019s Deutsche Bank were around +5 bps (112.2 bps) and +6 bps (136.4 bps) over the same period, respectively \u2013 about half the cost.<\/p>\n\n\n\n Credit Suisse also seems to be particularly sensitive to macro volatility, which may impede \u2013 or even upend \u2013 the execution of the company\u2019s strategic plans.<\/p>\n\n\n\n S&P Global analyst Anna Lozmann noted earlier in October that there appear to be increasing risks to Credit Suisse’s operating turnaround, given the \u201cfast-deteriorating economic environment and recent market turbulence.\u201d<\/p>\n\n\n\n At the same time, Lozmann gave some credit to the group’s commitment to strong capital, which remained a key support to its single-\u2018A\u2019, and group\u2019s \u2018BBB\u2019 ratings, \u201cproviding it some buffer for deteriorating financial prospects and to implement its updated strategy and expected business reorganization\u201d.<\/p>\n\n\n\n At the end of Q3, Credit Suisse held roughly CHF 163 billion worth of long-term loans.<\/p>\n\n\n\n Year-to date in 2022, shares of Credit Suisse are down over 50%, while UBS Group is off about 9.3%, Deutsche Bank is down 20.5%, and the iShares MSCI Europe Financials exchange-traded fund (ETF) has fallen roughly 20.6%.<\/p>\n\n\n\n Traders\u2019 Academy: Corporate Earnings<\/a><\/p>\n\n\n\n Traders\u2019 Academy: Introduction to U.S. Corporate Bonds<\/a><\/p>\n\n\n\n Traders\u2019 Academy: Economic Indicators (European Union)<\/a><\/p>\n\n\n\nThree-Year Plan<\/strong><\/h2>\n\n\n\n
Dealing with Debt as Credit Confidence Wanes<\/strong><\/h2>\n\n\n\n
Learn More<\/strong><\/h2>\n\n\n\n