Credit Suisse’s recovery hurt by legal costs
MORTGAGE and tax litigation costs knocked Credit Suisse’s fourth quarter results, published yesterday, reversing some of its recovery over 2013.
Profits came in at SFr267m (£182m) in the three-month period, up two per cent on the same period of 2012.
But for the year as a whole profits came in at SFr3.1bn, more than double the SFr1.3bn in the previous year.
Group revenues rose 10 per cent on the year to SFr25.9bn while operating expenses slid three per cent to SFr20.7bn.
New litigation costs hit the fourth quarter numbers with the bank putting aside SFr514m to cover the legal costs.
Of that, SFr339m covers ongoing mortgage litigation and dragged down the investment banking results to a loss of SFr40m in the three-month period.
The remaining SFr175m is set aside for tax litigation, including US action against the bank for secret accounts.
The charge hit Credit Suisse’s private banking and wealth management arm, which reported pre-tax income of SFr870m for the quarter.
Cost cutting also continued – headcount fell three per cent on the year to 46,000. At the same time compensation per head fell eight per cent, totalling SFr11.3bn for the year.
Return on equity increased from 3.9 per cent in 2012 to 7.5 per cent in 2013.
On a look-through basis its Basel III core equity tier one capital ratio climbed to 10.3 per cent at the end of the year.
The bank’s shares increased 1.52 per cent on the day.
“We are confident the continued momentum we see in our strategic businesses, combined with the successful execution of the run-off of positions and losses in the non-strategic units, will allow us to achieve our targeted return on equity of 15 per cent over the cycle,” said chief executive Brady Dougan.