Credit Suisse Group posted a write-down of 2.07 billion Swiss francs ($1.88 billion) for subprime-related assets on Tuesday as it said fourth-quarter earnings dropped 72 percent to 1.33 billion francs ($1.2 billion).
Switzerland’s second-largest bank said its net subprime exposure is 1.6 billion francs ($1.45 billion), down sharply from 3.9 billion francs at the end of September — showing that Credit Suisse continues to weather the subprime crisis better than some. Its crosstown rival UBS AG, the largest Swiss bank, is expected to report a quarterly and yearly loss on Thursday.
Nonetheless, Credit Suisse said net profit in the three months ended Dec. 31 was down from the 4.67 billion francs recorded the previous year, when earnings were bolstered by investment banking and the sale of insurer Winterthur.
The bank also said it has received subpoenas and requests for information about subprime mortgages from regulators. The company said it faces a purported class-action lawsuit related to its role in underwriting mortgage pass-through certificates for a unit of Countrywide Financial Corp., the largest mortgage lender and home loan servicer in the U.S.
According to a filing Tuesday with the Securities and Exchange Commission, Credit Suisse is cooperating with the subpoenas and requests for information. Regulators asked for information about Credit Suisse’s “origination, purchase, securitization and servicing of subprime and non-subprime residential mortgages and related issues,” according to the filing.
Goldman Sachs Group Inc., Bear Stearns Cos. and Morgan Stanley previously have received requests for information related to subprime mortgages.
Credit Suisse said market turmoil still poses stiff challenges, but that it was confident of achieving a “superior performance” over various market cycles.
Chief Executive Brady W. Dougan said the results were “achieved in an extremely challenging environment.”
Analysts praised Credit Suisse for its thorough disclosure compared with rivals, but analyst Derek De Vries of Merrill Lynch said its large exposure to mortgage securities and loans may translate to further markdowns.
Credit Suisse said net revenues for the quarter came to 9.4 billion francs ($8.5 billion), down 13 percent from 10.8 billion francs for the fourth quarter of 2006.
For the full year, net income was 8.5 billion francs ($7.7 billion), down 25 percent from 11.3 billion francs in 2006. Net revenues for the full year rose 6 percent to 40.9 billion francs ($37.2 billion) from 38.6 billion francs.
The bank proposed raising its dividend to 2.50 francs a share ($2.27), compared with 2.24 plus a par value reduction last year, and said it is already more than halfway through an 8 billion franc ($7.3 billion) share buyback plan, which it sped up last year.
The earnings were largely in line with market expectations, analysts said.
Standard & Poor’s Ratings Services said today that its ratings and outlooks on Credit Suisse were unaffected by the company’s fourth-quarter earnings statement. It sees Credit Suisse’s “performance to date as relatively resilient, thanks mainly to the benefits of diversity at the group level, low exposures to (collateralized debt obligations), and extensive hedging activity.”
Credit Suisse shares declined earlier in the day, but recovered later and rose 2.5 percent to close at 57.50 francs ($52.25) in Zurich.