Swiss banking giant Credit Suisse Group (CS) on Thursday reported a loss for the fourth quarter, as its investment banking business posted its second consecutive loss amid adverse market conditions. The results were weighed down by hefty costs and the bank now expects to meet its target of risk-weighted asset reduction earlier than planned.
Chief Executive Officer Brady Dougan said: "Our performance for the fourth quarter 2011 was disappointing. It reflects both the adverse market conditions during the period and the impact of the measures we have taken to swiftly adapt our business to the evolving market and regulatory requirements."
The results mirrored that of larger rival UBS AG (UBS), which earlier this week reported a 76 percent slump in fourth-quarter profit, citing losses from its investment banking arm.
Credit Suisse's net loss attributable to shareholders was 637 million Swiss francs ($698.71 million) or 0.62 francs per share, compared to a profit of 841 million francs or 0.59 francs per share last year.
The latest results were hurt by 981 million francs collectively from realignment costs, strategic exits from businesses and the accelerated Basel III risk-weighted assets reduction.
On a core basis, the lender reported a pre-tax loss from continuing operations of 998 million francs, compared to a profit of 1.31 billion francs last year.
Core net revenues plunged to 4.473 billion francs from 6.960 billion francs.
Investment Banking revenues declined 64 percent to 1.251 billion francs as fixed income sales and trading revenues plummeted to 36 million francs from 888 million francs. The segment reported a pre-tax loss of 1.31 billion francs, compared to income of 558 million francs in the prior year.
Investment Banking has been a painful business for financial institutions hampered by the economic crisis. The firms are trying to reduce this business and instead increase focus on wealth management to further growth.
Credit Suisse said in its Private Banking business, which comprises the global Wealth Management Clients business and the Swiss Corporate & Institutional Clients business, pre-tax income plunged to 467 million francs from 824 million francs.
In Asset Management division, pre-tax income dropped 52 percent to 87 million francs, while net revenues dropped 26 percent to 455 million francs.
Credit Suisse Group reported net new assets of 0.4 billion francs in the quarter. The lender's Basel 2.5 tier 1 ratio increased by 0.9 percentage points to 15.2 percent.
For the full year, net income attributable to shareholders plunged to 1.95 billion francs from 5.1 billion francs in the prior year, amid low levels of client activity and strength of the Swiss franc as well as several special items. Earnings per share dropped to 1.36 francs from 3.89 francs. Core net revenues declined 17 percent to 25.43 billion francs.
Discretionary variable incentive compensation for the Group dropped 41 percent from last year and aggregate variable incentive compensation for members of the Executive Board declined 57 percent.
The lender said it is on track with the previously announced 2 billion francs cost reduction program to be completed by the end of 2013. The company has accelerated the reduction of risk-weighted assets and expects to reach the target level by the end of the first quarter, nine months earlier than targeted.
The company's board will propose a distribution of 0.75 francs per share for 2011.
Credit Suisse settled in Zurich on Wednesday higher by 0.92 percent at 25.23 francs on a volume of 4.45 million shares.
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