It is a sign of tense times in global financial markets that a writedown of SwFr2 billion ($1.8 billion) is considered a triumph. But given that UBS, its closest rival, has already written down $18.4 billion of sub-prime investments, Credit Suisse has good reason to be cheerful about its fourth-quarter results, released this morning.
The Swiss bank was able to trim its estimate of full-year sub-prime writedowns by SwFr200 million. Unsurprisingly, Wilson Ervin, the chief risk officer of Credit Suisse, was quick to point out that the depreciation in Credit Suisse’s assets was among the lowest in its peer group. The bank even promised a dividend increase.
Yet Credit Suisse stock was trading this afternoon at SwFr56.10, no higher than Monday’s closing price. Although initially relieved by the bank’s announcement, investors can see that there are still some reasons to be nervous.
New money inflow into the wealth management business was better than expected, but asset management reported a SwFr247 million loss after it was forced to bail out one of its money market funds. The bank managed to reduce substantially its exposure to leveraged loans and mortgage-backed securities over the final quarter, but it still has SwFr36 billion of the former and SwFr26 billion of the latter on its books, which means that it remains vulnerable to further downturns.
Meanwhile, Credit Suisse indicated that it may not finish its share buyback programme this year because it remains cautious about the outlook in 2008. But is too early to celebrate.