Credit Suisse (NYSE:CS)(GB:0QP5) reported a record loss in 2022 as its Wealth Management business saw a significant decline due to heavy customer withdrawals. Meanwhile, the weakness in the Investment Banking segment further remained a drag. While CS is struggling to bring back growth, the financial services giant announced the acquisition of the Klein Group, the Investment Banking business of M. Klein & Company. The move will support the spinoff of its Investment Banking arm.
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Credit Suisse reported a net loss of SFr (Swiss Franc) 7.39 billion in Fiscal 2022, significantly higher than the loss of SFr.1.65 billion in Fiscal 2021. As for Q4, CS delivered a net loss of SFr.1.39 billion.
The bank said that the challenging economic environment and significantly higher deposit and net asset outflows at the beginning of Q4 weighed on its performance.
For the full year, its Wealth Management segment reported an 86% decline in pre-tax income. This reflects the net asset outflows of SFr.92.7 billion in Q4. Furthermore, reductions in the transaction and performance-based revenues and a decrease in recurring commissions and fees weighed on its performance.
Notably, concerns around liquidity and its financial health led to this massive outflow of assets. While Credit Suisse announced transformation plans to drive growth, nothing seemed to soothe investors. Its stock has corrected by over 64% in one year.
Through its transformation plan, Credit Suisse plans to focus only on the Wealth Management and Swiss Bank divisions. Moreover, it targets significant cost reduction. Additionally, Credit Suisse is restructuring its Investment Banking segment and carving out an independent capital markets and advisory business called CS First Boston. The acquisition of Klein will likely strengthen CS First Boston’s advisory and capital markets capabilities.
What’s the Prediction for Credit Suisse Stock?
To pacify investors, Credit Suisse said that it raised SFr.4 billion to boost liquidity. Also, it is taking measures to regain client inflows. However, the outflows will likely impact its Wealth Management revenues in Q1 of Fiscal 2023. Moreover, lower deposits and assets under management will likely hurt its net interest income and recurring commissions and fees.
Credit Suisse stock has a Hold consensus rating on TipRanks, reflecting two Buys, Seven Holds, and three Sells. Meanwhile, analysts’ average price target of SFr.3.46 indicates a limited upside potential of 6.99%. Meanwhile, CS stock has a Neutral Smart Score of Six.
