Credit Suisse Commentary

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CS Under Pressure

Shares in troubled French lender Credit Suisse fell to fresh all-time lows yesterday as the rout in global banking stocks rocked investor sentiment. Fresh on the back of its own liquidity scare last year which saw its stock price plunging, the company today published its delayed annual report for last year.

Weakness in Financial Controls

In the 2022 FY report, the company admits to weaknesses in financial controls including failure to design appropriate risk assessment systems for identifying and reporting weaknesses. The bank has been embroiled in a dispute with the SEC over revisions to cash flow statements from 2019 – 2020. Looking ahead, the bank noted that while it is taking steps to correct these weaknesses and ensure proper risk assessment systems are in place, doing so will require significant resources.

Downside Risks

Given the fears over the broader contagion impact from the SVB collapse and the risk of other banks heading in a similar direction, CS shares look vulnerable to further losses here. With investor sentiment already rattled by liquidity issues last year and the massive down-pricing of the company’s stock the bank is clearly at risk. With five quarters of losses and huge client outflow from the group’s wealth management business, CS shares look likely to remain under pressure near-term.

Technical Views

Credit Suisse

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Shares in CS continue to head lower within a well-defined bear channel. The stock recently fell below the 2.91 level and, with momentum studies bearish, while below there the focus is on a continued push lower and a further test of the channel bottom.

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