Credit Suisse (CS) on Thursday posted a fourth-quarter net income of $295 million, slightly up from $291 million in 2012.
The bank’s earnings were offset by legal costs from mortgage-backed security lawsuits, reporting a pre-tax loss of $44 million, which includes a $375 million litigation provision related to ongoing mortgage litigation.
“In 2013, our priorities were to further improve profitability, continue to strengthen our capital position and reduce risks and leverage exposure, while expanding market share in targeted markets,” Brady Dougan, CEO of Credit Suisse, said.
“We made strong progress towards these objectives, while at the same time taking a number of additional strategic measures, both on a Group level and in our two divisions, to continue the transformation of our business,” Dougan added.
According to Nomura analysts, Credit Suisse declared a lower-than-expected cash dividend of $0.77 to allow for future litigation costs.
“Overall, we continue to regard CS attractively valued versus the sector, but we would not expect these results to be a strong catalyst given the better delivery of UBS (also rated Buy), notwithstanding a positive outlook statement about the start to the year,” Nomura noted in an emailed report.
However, Credit Suisse remains optimistic.
“Results so far this year have been largely consistent with the good starts we have seen in prior years, with some variability across businesses,” Dougan said.
“We are confident that the continued momentum we see in our strategic businesses, combined with the successful execution of the run-off of positions and losses in the non-strategic units, will allow us to achieve our targeted return on equity of 15% over the cycle,” Dougan concluded.