CREDIT SUISSE: We are disappointed, but...

... we remain on the contrarian side! Despite all the "prophecies of doom", the major bank CREDIT SUISSE will also achieve the turnaround, but we admit that we mistakenly saw more light on the horizon already for Q4 2021. But who could have expected the high goodwill impairment of CHF 1.6 billion, for Donaldson Lufkin Jenrette, which was acquired in 2000. Without this misbooking as well as high legal costs, the result would have been a "black zero". We think that CS is taking advantage of the negative moment - as other banks do in such situations - and is cleaning up as much as possible in order to be able to shape a "healthier" future. This is also confirmed with the conclusion of the legal case in the US and the payment of USD 81 million for alleged market manipulation; this despite the fact that the plaintiffs' claims are unfounded. The bottom line is another "clean slate." But will this soon put an end to the constant stream of negative news? Normally, this should be the case! The extremely unsuccessful year of 2021 can and must be ticked off; according to the CS CEO, this will be followed by a "transition year" in 2022, in which the bank wants to return to profit with a lower earnings base. It won't be easy, especially since we don't see the problem primarily in revenues - as long as the majority of CS customers stay loyal - but on the cost side: restructuring costs and also higher compensation expenses ("never-ending stories"?) are likely to be a burden in 2022, even though the bonus pool for 2021 has allegedly shrunk by 32% ("100% would also be justifiable!").

We remain confident for the turnaround, but have to push it back a bit on the timeline... H2 2022 at the earliest, 2023 at the latest. Confidence remains battered for now, yet some positive momentum seems to have set in. The stock is substantially undervalued, the discount too high. It offers at least a good risk-reward ratio. Price target remains at CHF 12!

CREDIT SUISSE N is listed on the SIX Swiss Exchange under the symbol CSGN, the security number is 1'213'853, last price approx. CHF 8.03.

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