Credit Suisse 4Q Profit Falls 72%; Writedowns Only $1.2 Billion

These days, showing a profit in the securities industry puts one in exclusive company. The Zurich-bank’s writedowns of $1.2 billion, which would be a shocker in any other era, are a cause for cheer now. However, the earnings came in somewhat short of estimates.

From Bloomberg:

Credit Suisse Group, Switzerland’s second-biggest bank, said fourth-quarter profit fell 72 percent on lower earnings at the securities unit after writedowns of 1.3 billion Swiss francs ($1.2 billion) on debt and loans.

Net income fell to 1.33 billion francs from 4.67 billion francs in the year-earlier period, the Zurich-based bank said in a statement today. That missed the 1.43 billion-franc median estimate of 11 analysts surveyed by Bloomberg….

“They’ve dodged the worst of the bullets in terms of writedowns, certainly in 2007,” Bear Stearns Cos. analyst Christopher Wheeler said before the release. Earnings now depend on “how far capital markets revenues fall during the course of 2008,” he said….

Managers at the SPS mortgage-servicing unit alerted the executive board to concerns about subprime assets in 2006. By the end of that year, the company had originated about 40 percent fewer subprime mortgages than in 2005, Dougan has said.

Credit Suisse had net third-quarter writedowns of 2.2 billion francs on collateralized debt obligations, residential and commercial-backed securities and leveraged loans….

Credit Suisse may suffer this year from a revenue slowdown or potential writedowns from commercial mortgage-backed securities and leveraged loans, analysts including ABN Amro Holding NV’s Kinner Lakhani have said.

The bank ranked fifth among global CMBS underwriters in the first nine months of 2007, Lakhani said. It also ranked fifth among bookrunners for leveraged loans in the Europe, Middle East and Africa region last year, according to Bloomberg data.

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