Credit Suisse Returns to Profit, Offers Stock Dividend Option 

credit-suisse

Credit Suisse Group AG swung to a fourth-quarter profit, announced additional asset reductions and proposed investors choose whether to receive their dividend in shares or cash for 2014 amid pressure to boost capital.

Net income amounted to 921 million francs ($991 million), Switzerland’s second-biggest bank said in a statement Thursday, compared with a 476 million-franc loss in the year-earlier period. Profit beat the 869 million-franc estimate of six analysts surveyed by Bloomberg.

Chief Executive Officer Brady Dougan has been scaling back the investment bank and selling real estate to boost Credit Suisse’s capital buffers, hurt last year by a $2.6 billion fine for helping Americans evade taxes. Prospects of stricter capital requirements in Switzerland raised questions about Credit Suisse’s balance-sheet strength, while the appreciation of the franc and negative interest rates might cut into profit.

“For Credit Suisse, key in our view is to improve capital and leverage ratio,” Kian Abouhossein and Amit Ranjan, analysts at JPMorgan Chase & Co said in a Jan. 26 note.

The board of directors agreed to cut its compensation by 25 percent, while variable compensation for the executive board was cut by an equivalent of 20 percent, the bank said. Credit Suisse said it cut bonuses for the group by 9 percent to reflect stable pretax profits and the impact of the U.S. tax fine.

Franc Impact

The bank plans to distribute to shareholders 70 centimes a share and investors will vote on the plan April 24, Credit Suisse said. It paid shareholders the same amount in cash for 2013 profit after giving a combination of shares and cash for the previous two years. The bank also proposed Seraina Maag as a new member of the board, while Jean-Daniel Gerber and Anton van Rossum will not stand for re-election.

Credit Suisse fell 21 percent in Zurich trading so far this year. The decline compares with a 0.9 percent increase in the 49-member STOXX 600 Banks Price Index.

The bank said on Jan. 21 that it had positive trading results and hadn’t suffered any “material” losses in foreign-exchange trading since the Swiss central bank roiled markets. Still, it indicated that currency swings may hurt profit as costs soar in proportion to revenue.

The company said Thursday that based on last year’s earnings the franc move would hurt profit about 3 percent and plans to offset that impact through 200 million francs in cost cuts in addition to already announced reductions.

The bank plans to make about additional reductions in assets of as much as 70 billion francs by the end of this year to boost its leverage ratio.

The company also sold a property on Zurich’s main Bahnhofstrasse shopping street to Swatch Group AG for an undisclosed amount in November to boost capital.

UBS earlier this week reported fourth-quarter earnings that beat estimates after a tax gain and proposed doubling its dividend after reaching capital targets. Earnings at the company’s wealth management division fell short of analysts’ expectations, sending shares down 5.1 percent since then.

Source: Bloomberg – Credit Suisse Returns to Profit, Offers Stock Dividend Option

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