Credit Suisse books $4.06 billion loss in 2015

Credit Suisse books $4.06 billion loss in 2015

Swiss banking giant Credit Suisse on Thursday posted a net loss of nearly $3.0 billion for 2015, hit by hefty litigation provisions and restructuring charges, sending its share price down more than 12 percent.

Switzerland's second largest bank posted a net loss of 2.9 billion Swiss francs (S$4.06 billion) for the year, compared to a net profit of 1.8 billion francs in 2014.

Observers voiced disappointment, with Vontobel analyst Andreas Venditti describing lamenting that "overall, this is a weak set of results." And the IG analysis firm stressed that "genuine concern is growing about Credit Suisse."

Investors too showed their unhappiness, sending Credit Suisse's share price plummeting to 12.10 percent to 14.53 Swiss francs a piece in mid-morning trading as the Swiss stock exchange's main SMI index dipped only 0.6 percent.

The bank's new boss Tidjane Thiam announced last October the bank would axe thousands of jobs and raise billions in fresh capital as it strengthens its balance sheet and pivots its focus towards wealth management and Asia.

He said Thursday the bank was accelerating that process and were targeting 500 million francs in cost-savings per year, and would rapidly be letting some 4,000 employees go.

Much of the 2015 loss was meanwhile due to writing down the value of its assets by 3.8 billion Swiss francs in the final quarter of last year "as a result of the new strategic direction, structure and organisation that was announced in October 2015".

Restructuring charges came in at 355 million francs and 821 million was set aside for litigation.

The bank insisted the "substantial charges... are not reflective of our underlying business performance".

Nevertheless, even its adjusted core results that do not include such charges saw pre-tax earnings fall to 4.2 billion francs from 6.3 billion in 2014.

However Thiam pointed to improving results in three segments on which it is now focusing, in particular its Asia-Pacific and wealth management units.

"This performance was achieved in spite of challenging conditions," said Thiam.

The Asia Pacific division for instance registered 17.8 billion francs in new cash inflow during the year.

But the division also saw its pre-tax profit fall 58 percent to 377 million Swiss francs, after suffering a 617-million loss in the fourth quarter.

"The fourth quarter of 2015 was characterised by volatile market conditions, pressures on market liquidity, a sharp decline in oil prices, widening credit spreads, continued uncertainty linked to asynchronous monetary policies, and large fund redemptions by market participants affecting asset prices," Thiam said.

Going forward, he warned times might remain rough.

"It is not clear when some of the current negative trends in financial markets and in the world economy may start to abate," he said.

"Market conditions in January 2016 have remained challenging and we expect markets to remain volatile throughout the remainder of the first quarter of 2016 as macroeconomic issues persist," Thiam said.

He stressed though that the bank expected "to continue to make progress on the key dimensions of our strategy as we continue the restructuring of the bank to position it well for the future, beyond 2016." But Vontobel analyst Venditti warned that the bank's profit ambition relies primarily on revenue growth, and that "given the current market environment, (its) ambitions look even more challenging".

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