It must be so very difficult to avoid sounding smug.
Brady Dougan, chief executive of Credit Suisse, on Tuesday reported net income of SFr1.3bn for the fourth quarter, leaving income from continuing operations for the full year up 3 per cent – excluding most notably the effect of selling the Winterthur insurance business to Axa – at SFr8,549bn. Just staying the black is considered something of an achievement for banks these days – but Credit Suisse have managed to do it in some style, and increase their dividend to SFr2.5 a share as a result, a rise of almost 12 per cent.
Cue Dougan’s trumpeting of the bank’s “integrated business model, global reach, strong risk management capabilities and capital position.” Fair enough – the Swiss bank spent a long time being compared unfavourably to arch rival UBS, against whose performance it has shined through the credit squall.
Investment banking, which was always going to be troublesome, logged a 19 per cent fall in income before tax for the year, as net revenues fell on the back of falling levels of business in fixed income and debt underwriting. The fourth quarter saw income from continuing operations fall a massive 86 per cent, but the business stayed in profit.
Credit Suisse took only a SFr1.3bn writedown across its leveraged finance and structured product businesses in the quarter, down from a still very modest SFr2.2bn in the third quarter.
How? In part, Credit Suisse has managed to keep the pipeline flowing in its leveraged finance unit, reducing its loan commitments from SFr58.6bn at the end of the third quarter to SFr36bn, with a fourth quarter writedown of only SFr231m.
Deal Journal noted on Monday that the Swiss bank has proved adept, distributing or hedging its stakes in three big deals while rivals struggled: the buyouts of Harrah’s, Intelsat and Blackstone’s proposed acquisition of Alliance Data Systems. The single theme of how it got these deals done, one person said, was that “all of us [banks] are really in the moving, not the storage business.”
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