Credit Suisse reported 4Q2020 net losses of CHF353mn ($393mn) as against profits of CHF852mn ($949)in the same period last year while net revenues fell to CHF5.2bn ($5.8bn), down 16%. Annual net revenues were down 4% to CHF5.3bn ($5.9bn) and net profits were down 22% at CHF2.7bn ($3bn). The lower profits were majorly on account of “increased provision for credit losses, major litigation provisions, restructuring costs and significant items” as stated by the bank. Provisions for credit losses were at CHF1.1bn ($1.2bn) in 2020 vs CHF324mn ($361mn) in 2019 and ~4x higher than their 11-year average of CHF280mn ($312mn). They stated this was due to ‘negative developments in our corporate lending portfolio and the application of the current expected credit loss (CECL) methodology’. Litigation costs were related to a November ruling regarding residential MBSs involving the company MBIA.
The wealth management business saw revenues fall 24% while investment banking revenues jumped 15% Q4 YoY. The bank’s CET1 ratio stood at 12.9% vs 13% 3Q2020 and 12.7% a year ago. The Swiss major said that it will pay a dividend of CHF 0.2926/share ($0.33/share) up 5.4% vs 2019 besides approving buying back of CHF 1-1.5bn in stock. CEO Thomas Gottstein said “Despite a challenging environment for societies and economies in 2020, we saw a strong underlying performance across Wealth Management and Investment Banking, while addressing historic issues. Credit Suisse’s dollar bonds were trading stable with their USD 5.1% Perp at 102.63, yielding 4.74%.
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