Credit Suisse Group AG will halve its dividend next year as it strives to boost profits amid the fallout from the hedge fund crash Archegos Capital, according to analysts at S&P Global Market Intelligence.
Switzerland’s second-largest bank will pay CHF 0.05 per share, analysts said in a June 16 note. The lender distributed an annual dividend of CHF 0.10 in May after declaring a loss in 2021.
“We expect a further cut in 2023 with significant risk of suspension,” analysts said.
The forecast comes after Credit Suisse issued its third profit warning this year and a projected loss in the second quarter due to market volatility, weak client inflows and client deleveraging. JThe UK Financial Conduct Authority also ordered the lender to do more to prevent misconduct and improve senior management accountabilityaccording to a June 12 FinancialTimes report, addition to damage to reputation suffered by Credit Suisse following billions of losses of the bankruptcy of Archegos and the financial services company Greensill Capital (UK) Ltd. Last year.
“Back-to-back incidents at Credit Suisse have shaken investor confidence,” the Market Intelligence note said.
A Credit Suisse spokesperson declined to comment on the dividend or earnings outlook when contacted by Market Intelligence.
The bank will likely post an EPS of CHF0.19 for 2022, followed by CHF 0.93 in 2023, according to analyst estimates compiled by Market Intelligence. Last year, the bank recorded a loss of CHF 0.67 per share.
Analyst forecasts for next year’s dividend range from CHF0.04 to CHF0.25, based on Market intelligence data.
The bank paid CHF 0.2776 per share in 2019 and CHF 0.2625 in 2018. The lender continued to make payments amid the coronavirus crisis, even as many eurozone banks suspended payments altogether. dividends at the request of regulators.
Strong second-half earnings could help Credit Suisse avoid a dividend cut, even if a cut is the base estimate, according to the Market Intelligence note. Payments could also increase over the next two years.
“There is certainly room for a better dividend if the bank manages to avoid further scandals and successfully complete its restructuring,” Kevin Soyer, director of dividend forecasts at S&P Global Market Intelligence, said by email.