Fourth quarter income was way down for Switzerland's largest bank, even with writedown totals lower than expected. CEO says results show resilience
Credit Suisse has come through the credit crunch relatively unscathed so far after announcing lower-than-expected write-downs, but was unable to prevent a 72 per cent slump in profits in the final three months of last year.
The second largest bank in Switzerland revealed yesterday that writedowns related to the sub-prime crisis in the US were Sfr1.26bn (£580m) in the fourth quarter, bringing its total for the year to Sfr2.07bn.
This was lower than expected, after the bank had already written off Sfr2.2bn in the third quarter. A spokesman said the group had made gains on hedges in the first half of the year.
This comes after its larger domestic rival UBS has been forced to write down $14bn from sub-prime, which is expected to push the bank to its first annual loss when it announces its results tomorrow. The credit crisis has left few unscathed, with Wall Street banks including Citigroup and Merrill Lynch among the worst hit with multibillion-dollar write-downs and job cuts.
Credit Suisse announced in Zurich yesterday that net income was down in the fourth quarter, spiralling more than two-thirds from Sfr4.67bn in the fourth quarter of 2006 to Sfr1.32bn last year. The numbers slightly missed analysts' consensus predictions of Sfr1.4bn.
The bank pointed out that it was down 49 per cent on continuing operations after the sale of its insurance business Winterthur to Axa. The group blamed the falls on poor performances in its asset management and investment banking divisions. The asset management arm made a loss of Sfr247m, the only loss-making division in the quarter, on valuation hits taken by its money market funds. At the investment banking operation, pre-tax profits were 86 per cent lower than the previous year at SFr328m.
The group said it had demonstrated the "ability to react swiftly to the changing market environment by reducing headcount and resources in the areas that have been negatively affected by the recent market developments". Strong performances were put in by the company's private banking and wealth management operations.
Credit Suisse's chief executive Brady Dougan said: "The resilience of our business model and our disciplined approach were clearly reflected in our fourth-quarter results."
The group reported full-year net income had fallen almost 25 per cent from SFr11.3bn in 2006 to Sfr8.5bn last year.