Credit Suisse says Q4 net profit down 72% to US$1.2 billion
Credit Suisse Group on Tuesday reported a CHF2.07 billion writedown for subprime-related assets, but still posted a fourth-quarter net profit of CHF1.33 billion francs
13 February 2008
ZURICH - Credit Suisse Group on Tuesday reported a CHF2.07 billion writedown for subprime-related assets, but still posted a fourth-quarter net profit of CHF1.33 billion francs
The bank, Switzerland's second-largest, said its net subprime exposure is CHF1.6 billion francs, down sharply from CHF3.9 billion at the end of September, showing the bank continues to weather the subprime crisis better than some, such as its crosstown rival UBS AG.
Nonetheless, Credit Suisse said net profit in the three months ending December 31 was 72% below the CHF4.67 billion recorded in the year-earlier period, when earnings were bolstered by investment banking and the sale of insurer Winterthur.
But rival UBS AG, the largest Swiss bank, has been hit much harder. It is expected to report a quarterly and yearly loss on Thursday.
Credit Suisse said in the United States that it has received subpoenas and requests for information about subprime mortgages from regulators.
The company said it also faces a class-action lawsuit related to its role in underwriting mortgage pass-through certificates for a Countrywide Financial Corp. unit.
According to a filing Tuesday with the Securities and Exchange Commission, Credit Suisse is cooperating with the subpoenas and requests for information. Regulators requested information regarding Credit Suisse's "origination, purchase, securitization and servicing of subprime and non-subprime residential mortgages and related issues," according to the filing.
Goldman Sachs Group Inc, Bear Stearns Cos and Morgan Stanley previously have received requests for information related to subprime mortgages.
Credit Suisse said market turmoil still poses stiff challenges, but that it was confident of achieving a "superior performance" over various market cycles.
Analysts praised Credit Suisse for its thorough disclosure compared with rivals, but analyst Derek De Vries of Merrill Lynch said its large exposure to mortgage securities and loans may translate to further markdowns.
Chief Executive Brady W Dougan said the results were "achieved in an extremely challenging environment."
Net revenues for the quarter were CHF9.4 billion, down 13% from the CHF10.8 billion for the fourth quarter of 2006.
For the full year net income was CHF8.5 billion, down 25% from CHF11.3 billion in 2006.
Net revenues for the full year rose 6% to CHF40.9 billion from CHF38.6 billion.
The bank proposed raising its dividend to CHF2.50 a share, compared with CHF2.24 plus a par value reduction last year, and said it is already more than halfway through a CHF8 billion franc share buyback, which it sped up last year.
The earnings were largely in line with market expectations, analysts said.
Standard & Poor's Ratings Services said today that its ratings and outlooks on Credit Suisse were unaffected by the company's fourth-quarter earnings statement
Credit Suisse shares declined earlier in the day, but recovered later and rose 2.5% to close at CHF57.50 in Zurich.[Copyright ap 2008]