Credit Suisse Group AG (SWX: CSGN) lost another 20% on Thursday after reporting a massive loss for its fiscal third quarter and announcing a significant strategic overhaul.
Details of the announced overhaul
That overhaul will see it “radically” restructure its investment bank and tap on strategic investors to raise CHF 4.0 billion in capital. About CHF 1.5 billion of that will come from SNB – the Saudi National Bank.
SNB will get a 9.9% stake in return. Speaking with CNBC, CEO Ulrich Koerner said:
We’re announcing transformation into a new Credit Suisse – a bank that will be much more stable, will be sustainably profitable, much simpler in how it is set up. It’s a very decisive action programme.
Credit Suisse will also commit to lowering exposure to risk-weighted assets and cut costs by as much as 15% over the next three years. For the year, the Credit Suisse stock is now down nearly 60%.
Credit Suisse Q3 earnings snapshot
The financial service firm expects CHF 2.9 billion worth of charges related to this restructuring by the end of 2024. It attributed the weak performance in Q3 primarily to the macroeconomic uncertainty.
- Lost CHF 4.03 billion versus CHF 434 million profit last year
- Revenue tanked 30% on a year-over-year basis to CHF 3.8 billion
- Consensus was CHF 413 million loss on CHF 3.99 billion revenue
- Common Equity Tier 1 Ratio dropped 180 basis points to 12.6%
Provisions for credit losses were CHF 21 million this quarter, as per the earnings press release. Credit Suisse ended its Q3 with CHF 1.4 billion worth of assets under management.
Those interested in buying the dip and searching for “CSGN” on online trading platforms should know that Wall Street, despite the sell-off, rates Credit Suisse stock at “underweight”.