Credit Suisse: Concerned, But Not Surprised

Nov. 28, 2022 5:40 PM ETCredit Suisse Group AG (CS)C, DB7 Comments
Cavenagh Research profile picture
Cavenagh Research
3.69K Followers

Summary

  • Credit Suisse is losing clients and assets under management at record pace, which is concerning, but not very surprising.
  • The bank warned investors that the bank has lost approximately $88.5 billion of client assets since Q3 reporting.
  • The loss of profitability caused by the contraction in wealth management is amplified by a slowing demand environment for investment banking.
  • Although it is true that CS is trading very cheap, I reiterate my claim that buying cheap banks is not a successful strategy.
  • I continue to believe that CS is likely to shrink into the x0.22 P/B valuation, thus justifying the low valuation through business contraction.
Credit Suisse Reports Major Losses After Crash Of Large Hedge Fund

Spencer Platt/Getty Images News

Thesis

Credit Suisse (NYSE:CS) is losing clients and assets under management at record pace, which is concerning, but not very surprising.

As I have written in a previous coverage article

... banking is all about confidence and trust. And Credit

This article was written by

Cavenagh Research profile picture
3.69K Followers
5y experience as an investment analyst for a major BB-Bank. Currently working towards the CFA charter. Passion for risk-assets (Growth, Contrarian, Emerging Market) ex-colleague and close friend of Investor Express

Disclosure: I/we have a beneficial long position in the shares of DB, C either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: not financial advise

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