While Credit Suisse CEO Brady Dougan insists that the company’s recent Q4 results reflected a “good, solid fourth quarter,” critics are skeptical after the report showed net profit below original analyst forecasts. Dougan did concede to the fact that the group had “continuing work to do” to resolve litigation issues due to what he referred to as macro conditions, however, he stands behind his statement that Q4 ended on a strong note for what has been a “challenging quarter for the industry.”
According to a recent CNBC report, net profit for Credit Suisse’s fourth quarter came in at 267 million Swiss francs or $295 million, lower than Reuters’ forecast of 448 million Swiss francs. The second largest Swiss bank by market value took a 339 million Swiss franc provision in the quarter to cover ongoing mortgage litigation and another 175 million Swiss franc provision for a U.S. tax probe into accounts hidden in Switzerland.
The bank’s overall net profit rose to 454 million Swiss francs or $509.1 million, an improvement on the same time in 2012, however, a poll of analysts had suggested that overall net profit would come in at 705 million Swiss francs. The report noted that its fixed-income division was dented by volatility in government bond yields, ahead of the expected announcement that the U.S. Federal Reserve would start winding down its bond-buying program in October, however, that never happened.
Credit Suisse also announced that it would restructure its interest rate trading activities, after recognizing that the majority of the industry is going to have to go in that direction. Shares of the group closed about 1.5 percent higher on the Swiss stock exchange in the past week.
In terms of the year ahead, Dougan is confident the group can achieve its targeted return on equity of 15 percent. Credit Suisse is currently in the middle of a cost-cutting drive designed to save 4.5 billion Swiss francs in annual costs by the end of 2015. The banks CEO claims the program is on track.
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