ZURICH Credit Suisse Group AG CSGN.VX posted its biggest-ever annual loss after a poor fourth quarter hit by trading losses and restructuring charges, but expressed cautious optimism for 2009 even as it cut some financial targets.
The Swiss bank said it had a made a strong start to 2009 and each division was showing a profit in the year to date, echoing relatively upbeat comments from rival UBS AG UBSN.VX (UBS.N) which on Tuesday reported the biggest annual net loss in Swiss corporate history.
"We are well positioned going into 2009," Chief Executive Brady Dougan told a news conference, but added: "This is not a light at the end of the tunnel message."
Switzerland's second-largest bank unveiled an annual net loss of 8.2 billion francs ($7.1 billion), worse than the average analyst forecast of 6.3 billion from a Reuters poll but in line with predictions from some Swiss newspapers and less than half the loss posted by UBS.
Credit Suisse racked up a fourth-quarter loss of 6 billion Swiss francs ($5.2 billion), missing an average analyst forecast of 4 billion while further reducing its exposure to risky asset classes as it slashed its dividend and staff bonuses.
On average bonuses were slashed by 60 percent, with managing directors getting no unrestricted cash. The overall bonus payout for 2008 was 2 billion Swiss francs, mostly for junior staff.
Dougan said the bank had made mistakes but now had a stronger capital base than most of its peers thanks to a Tier 1 ratio of 13.3 percent and less than 12 billion Swiss franc of toxic assets on its books and was still managing to attract client inflows at its private bank.
West LB analyst Georg Kanders said: "Results are negative and not much better than UBS in Q4. But there were lots of extraordinary items ... Toxic assets are now less of an item. They have confirmed they have been significantly reduced.
"Overall I would say that wealth management did much better than UBS. They have also had a positive start in January and just confirmed they have new inflows in the period."
After falling as much as 7 percent, shares in Credit Suisse later turned positive, rising 1.1 percent to 31.22 francs at 1151 GMT (6:51 a.m. EST), while UBS shares, which gained strongly on Tuesday, rose 1.3 percent to 13.80 francs, compared with a 1.1 percent drop in the DJ Stoxx European banking index .SX7P.
BIG TRADING LOSS
CS also cut some of its long-term targets, including its goal for an annual return on equity which was pared back to "above 18 percent" from a previous 20 percent.
It said it would pay a 2008 cash dividend of just 0.10 francs, compared to 2.50 francs in 2007.
Credit Suisse had already warned in December that it made a net loss of about 3 billion francs in October and November and would take restructuring charges of about 900 million in the quarter as it moves to cut 5,300 jobs, or 11 percent of staff.
Analysts were also anticipating the 538 million franc loss it booked in the quarter for selling part of its fund management arm to Aberdeen Asset Management (ADN.L), but said they were surprised by the extent of trading losses in December.
The bank was hit by a trading loss of 6.7 billion francs in the quarter, of which about 1.7 billion francs came in December.
Credit Suisse said its private bank recorded net new assets of 50.9 billion francs in 2008, but only 2 billion in the fourth quarter, as strong net client inflows of 13.8 billion francs were offset by deleveraging.
"Inflows in the private bank look disappointing. A good aspect is that they have said January was positive, but the first impression is that the report is weak," said Citibank analyst Jeremy Sigee.
Walter Berchthold, CEO of private banking at Credit Suisse, said half the deleveraging happened in Switzerland while inflows mainly came from the U.S. onshore business: "I think the worst is behind us," he said, talking about the trend in deleveraging.
Credit Suisse said it had achieved about 50 percent of its targeted job cuts to bring headcount down to 47,800 by the end of 2008. It reiterated a target of paring its investment bank to 17,500 staff by the end of 2009 from 19,700 at the end of 2008.
Dougan said Credit Suisse, which contrary to UBS did not need state help, will focus more on private banking, where he sees the best growth environment in a generation, and asset management.
(Additional reporting by Martin de Sa'Pinto; Editing by Will Waterman and David Holmes)