Credit Suisse Group AG (NYSE:CS) reported a big loss of CHF5.83 billion in the fourth quarter compared with a profit of CHF691 million last year. The company recorded CHF3.8 billion towards goodwill impairment charges, restructuring charges of CHF355 million, and significant litigation items of CHF564 million. The write-down was related to an acquisition in America in 2000 and it appears that the bank wants to reduce its dependence on investment banking.
Revenue Also Drops
Credit Suisse also witnessed a plummet of 34% in revenues to CHF4.2 billion in the fourth quarter. Results fell shy of the analysts’ estimations of CHF4.85 billion and a loss of CHF4.97 billion for the fourth quarter. The bank has already incorporated the impairment charges to its balance sheet. As the numbers were worse than expected, the stock is getting hammered more than 10% currently, below lows not seen since 2002.
Of late, the bank has been trying to reduce its dependence on its investment bank. Instead, the company appears to be focused more on wealth management. CEO Tidiane Thiam said that results reflected the new structure of the bank as he revealed tactical initiatives last October. He indicated then Credit Suisse’s main focus would be to bolster its wealth management, especially in Asia.
Accelerating Cost Cutting Program
Credit Suisse’s CEO said that the challenging environment forced it to speed up the execution of its cost cutting program across the bank. He said that the bank has already identified and took initiatives to pave the way for reducing its fixed cost base permanently. As a result, it would be able to save SF 500 million a year on an annual run-rate basis.
Credit Suisse indicated that it would also slash its workforce by about 4,000. The company’s CEO indicated that it has already executed a number of measures in the fourth quarter like transfer of its US private banking. As a result, it would be able to conserve CHF3.5 billion before the end of 2018.