5 Takeaways Credit Suisse Earnings

Credit Suisse reported a massive loss for the fourth quarter on Thursday, bigger than analysts expected though they knew a large goodwill-impairment charge was on the way. Shares of the bank fell more than 9%. Here are the main takeaways from the Swiss bank’s earnings report:

#1: Goodwill Charge

Credit Suisse said it took a 3.8 billion Swiss franc ($3.78 billion) goodwill-impairment charge related to its purchase in 2000 of U.S. investment bank Donaldson, Lufkin & Jenrette for $11.5 billion. Credit Suisse is focusing now on wealth management, reducing its presence in investment banking.

#2: Weath-Managment Risk

Wealth management carries its own risks too, if clients take fright at stormy markets, pulling their money out of the bank or declining to invest it actively. UBS reported heavy outflows for its wealth-management business earlier this week. Credit Suisse said it suffered its own outflows in the quarter.

#3: Outflows

Asia was a bright spot for Credit Suisse, where net new assets at its private bank rose to 3 billion francs in the quarter. In contrast, there was an outflow of net assets at the private-banking operations at Credit Suisse’s Swiss unit, and at its international wealth-management business.

#4: Job Cuts

Credit Suisse clarified its cost-cutting plans, saying 4,000 jobs are to go, including contractors and consultants.

#5: Targets for 2018

Credit Suisse last year set a series of ambitious targets to reach by 2018, including more than doubling the pretax profit it makes in Asia. Asked by analysts if the bank can still hit those targets, CEO Tidjane Thiam said it can. “We have a clear strategy, clearly we’re implementing it in difficult markets,” he said. The bank has another headache: still high legal costs. Costs from litigation amounted to 821 million francs last year, with 564 million of that total in the fourth quarter alone.