Credit Suisse 4Q Profit Down by 72 Percent (Bloomberg) (12-02-2008)

Feb. 12 (Bloomberg) -- Credit Suisse Group, Switzerland's second-biggest bank, has announced a drop in profits by 72 percent in the fourth-quarter on lower earnings at the securities unit after 1.3 billion Swiss francs ($1.2 billion) of write-down's on debt and leveraged loans.

Net income dropped to 1.33 billion francs or 1.21 francs a share, the Zurich-based bank said in a statement today. That missed the 1.43 billion-franc median estimate of 11 analysts surveyed by Bloomberg. Credit Suisse declined 3.4 percent to 54.2 francs as of 10:10 a.m. in Swiss trading.

According to German Finance Minister Peer Steinbrueck, banks worldwide will suffer write-down's of $400 billion. The group believes that credit markets are likely to remain volatile and that policy makers will need to take measures to shore up the global economy.

Credit Suisse's markdowns in the quarter compare with $14 billion at UBS AG, the country's biggest bank, and 44 million Euros ($64 million) at Frankfurt-based Deutsche Bank AG.

Fourth-quarter revenue fell 13 percent to 9.4 billion francs, with investment-banking down 36 percent to 3.9 billion francs after markdowns of leveraged loans, mortgage-backed securities and collateralized debt obligations.

Pretax profit fell 30 percent to 3.03 billion francs, as earnings at the investment bank slumped more than analysts estimated, down 86 percent to 328 million francs, and asset management had a 247 million-franc loss. Profit from wealth management was 976 million francs and from corporate and retail banking was 401 million francs, both up more than 20 percent.

Credit Suisse fell 36 percent in Zurich trading over the 12 months through yesterday, cutting its market value to 65.2 billion francs. The 60-member Bloomberg Europe Banks and Financial Services Index fell 34 percent in the same period.

The Swiss bank raised its cash dividend for 2007 to 2.50 francs a share from 2.24 francs. Last year it paid out an additional 46 centimes a share after the Winterthur sale.

Managers at the SPS mortgage-servicing unit alerted the executive board to concerns about subprime assets in 2006. By the end of that year, the company had originated about 40 percent fewer subprime mortgages than in 2005, Dougan has said.

Credit Suisse wrote down a net 2 billion francs last year on debt and loans. The 2.2 billion-franc third-quarter charge it reported in November was narrowed by gains from hedging throughout the year.

Source: Bloomberg