Suisse posts first loss since 2008, sees tough markets
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[February 04, 2016]
By Michael Shields
ZURICH (Reuters) - Credit Suisse reported
its first full-year loss since 2008 after booking a big impairment
charge at its investment banking business, sending its share price
tumbling and piling pressure on new Chief Executive Tidjane Thiam.
Shares fell more than 12 percent on Thursday to hit their lowest
level since 1992 after Switzerland's second largest bank signaled a
difficult beginning to the year. Its stock price is now down 32
percent since the start of 2016.
Thiam, who took over the bank in July, said he would stick with his
plan to focus more on wealth management in emerging economies and
cut costs in the investment bank, despite the turbulent start to
markets this year.
"We have a clear strategy, clearly we are implementing it in
difficult markets and our outlook for the first quarter remains very
cautious," Thiam told an analyst call.
"(We have) very unique market conditions and they are challenging,
but fundamentally we are maintaining the objectives and the targets
we have presented".
Four months on from when Thiam set out his strategy, many analysts
are still unsure how Credit Suisse will hit growth targets, which
include more than doubling Asia Pacific pretax income by 2018.
The bank posted a 2015 net loss of 2.94 billion Swiss francs ($2.92
billion), worse than the median estimate of a 2.12 billion loss in a
It booked a goodwill impairment charge of 3.8 billion francs in the
fourth quarter as a result of the new strategic direction Thiam is
The impairment was mostly related to the acquisition of U.S.
investment bank Donaldson, Lufkin & Jenrette in 2000, it said.
The lender said it saw net outflows of funds in two of its three
main wealth management divisions during the period, though it target
market of Asia Pacific was the exception.
Rival UBS this week announced its best annual results since 2010
although it also saw an outflow of funds and weakening margins at
its flagship wealth management business.
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JP Morgan Cazenove analysts called Credit Suisse's results "very
messy", noting an underlying loss before tax versus market
expectations of a profit. The bank's common equity tier 1 capital
ratio of 11.4 percent also lagged consensus even after a 6 billion
franc capital raising last year, it noted.
Credit Suisse said it had accelerated cost savings so that it had
taken action on 34 percent of the measures planned by 2018, or 1.2
billion of the targeted 3.5 billion francs, with around 4,000 jobs
However, the bank has not dispelled scepticism about its ability to
meet its growth targets.
"Reaching the targets by 2018 seems more unrealistic than ever,"
analysts at Zuercher Kantonalbank said.
(Editing by Oliver Hirt and Brenna Hughes Neghaiwi; Editing by Mark
Potter and Keith Weir)
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