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All Eyes on Q2 Results as Credit Suisse Looks to Cut Costs

Story Highlights

Credit Suisse’s second-quarter numbers are anticipated on Wednesday. The banking major has missed estimates in the last two quarters and is looking to contain costs in a difficult environment.

Swiss banking major Credit Suisse (CS) continues to see a bumpy 2022. CS fell short of the Street’s expectations in the past two quarters, and its second-quarter numbers on July 27 are keenly anticipated. The company is expected to post a net loss per share of $0.02 for the period. In the year-ago period, it had posted earnings of $0.11 per share, which was well short of the expected $0.24 figure.

Furthermore, according to Reuters, CS is looking to lower its costs, and a senior banker said, “The numbers are catastrophic and the staff morale is low.” The bank’s top rung is looking to put in place a substantial cost-saving plan as its costs are outsized considering potential revenues.

CS has seen a number of recent woes, including the default of Archegos Capital (a loss of $5.5 billion); the resignation of Chairman Antonio Horta-Osario; failure to prevent money laundering; a nearly $500 million settlement in the Tuna bond case; and the collapse of Greensill funds (freezing of $10 billion supply chain funds).

Additionally, in July, the company postponed the launch of its real estate fund amid volatile markets. The wealth manager and investment bank are also looking to cut technology costs while keeping a focus on wealthy customers.

Analysts’ Take on CS

It’s not a surprise then that the bank’s shares have nosedived nearly 45% so far this year and are languishing at 52-week low levels.

In the meantime, 75% of analysts covering the stock have given it a Sell rating, with the consensus being a Moderate Sell. Nonetheless, the average price target of $6.92 indicates a 26.28% potential upside.

Closing Note

The Swiss bank’s road continues to remain bumpy. How it navigates these challenges in an already difficult macro environment remains to be seen.

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